The Governor of the South African Reserve Bank, Mr Tito Mboweni, today convened a meeting in Pretoria of leading academic, private sector, government, trade union and SARB economists to discuss recent economic developments with a specific focus on the following: 1.    Inflation targeting and the business cycleDr Johan van den Heever of the SARB, Professor Eric Schaling of Rand Afrikaanse University, and Dr Neva Makgetla of Cosatu debated the interrelationship between the two. The points raised included that in an inflation targeting environment, monetary policy still had to take the business cycle into account; that escape clauses built in to the inflation targeting framework would help to reduce interest rate volatility; a call for less reliance on interest rates as the tool to meet the inflation targets and more on introducing further supply side measures to increase productivity in order to meet the targets.  2.    Current world economic outlook and implications for South Africa:Mr Kau Msimang of Iscor, Dr Monde Mnyande of the SARB and Mr Rudolf Gouws of Rand Merchant Bank gave a brief synopsis of the current world outlook which covered declining economic growth in the US and thus slight downward revisions of prospects for South Africa. The surge in global metal prices was likely to be short-lived, but South Africa had benefited from the restructuring efforts of the global steel industry, and the country’s coal prices had benefited from the US energy crisis. South Africa was not immune to the global economic downturn especially on the export side but a lot depended on the extent of the US slowdown and the speed of recovery of the US and others such as Japan, Europe and non-Japan Asia. The opportunities for South African exporters arising from the depreciation in the exchange rate of the rand were highlighted. 3.    Are real interest rates in South Africa too high?The panel, consisting of Professor Greg Brown of Unisa, Mr Lumkile Mondi of Transnet and Mr Brian Kahn of the SARB, debated the appropriateness of the level of real interest rates and some definitional issues. There was some discussion about the real interest rates accruing to savers and investors and the interest rates paid by borrowers, particularly the sector of the population who have to rely on microlenders which often charge high rates of interest. Although South Africa’s short-term real interest rates are above the international average, this is a similar pattern to those countries that have yet to achieve their inflation targets. On balance it was felt that interest rates in South Africa were not out of line with international developments. There was consensus that meetings such as this should take place on a regular basis with fewer topics covered. The meeting was not a policy-setting forum but an informal exchange of views. ​