The predicament for the South African macroeconomic policymakers in the situation was that the adverse developments took place at a very inconvenient time if account is taken of prevailing conditions in the domestic economy in the first half of 1998. These adverse financial developments indeed forced an early abortion of an economic recovery that was in its infancy during the first quarter of 1998.
Of course, because long-term interest rates incorporate term premiums as well as discounted expectations of future short-term interest rates, the success of operations focused on influencing parts of the yield curve would be bolstered by a credible promise to move the short-term policy rate along a trajectory consistent with the targeted longer-term yields.