We live in a highly integrated financial world and we cannot ignore these developments. To reiterate the MPC position, the interest rate increase in January was not a one-off move. It is part of a necessary cycle to deal with the inflation risks and to normalise interest rates in the economy.
However, the speed and extent of tightening will be sensitive to domestic growth considerations, and to the pace of normalisation in the US which is likely to impact on the South African economy indirectly through the exchange rate. At this point in time, we are in what we assess to be a moderate extended cycle.