It nevertheless seems highly unlikely that the effectiveness of monetary policy will decline in South Africa in the next ten years because of the increased use of e-money, the liberalisation and globalisation of our financial markets or the development of private banking clearing mechanisms. At most these factors should only have a limited impact on the effectiveness of monetary policy.
It was, however, crucial in 2000 for monetary policy to prevent any spillover from the short-term upward inflationary pressure to medium-term inflation expectations, especially in the context of the strong economic growth witnessed in 2000. A tightening of monetary policy in 2000 was also indicated by the analysis of monetary developments.