Against the background of South Africa’s elevated current account deficit, which is expected to only correct slowly, the risk of abrupt swings in capital flows cannot be under-estimated. This environment calls for continued vigilance from policy makers, and preparedness to respond to the fast-changing economic and financial markets environment, and readiness to act to changes one’s monetary policy stance when deemed appropriate.
It also calls for ongoing dialogue, exchange of information and appropriately calibrated communication in order to strengthen policy credibility. As you are aware, we embarked on a gradual, datadependent, policy normalisation process at the beginning of this year, which will continue, but will also take account of the unfolding situation as it affects the inflation trajectory and growth dynamics.