Introduction The global economic recovery has progressed more rapidly than expected in the period since the previous Monetary Policy Review was published in November 2009. However, activity is recovering at varying speeds in different regions, and significant risks and uncertainties continue to threaten global financial markets. Concerns regarding the solvency of a number of countries in the euro area have threatened to transform the initial banking crisis into a sovereign debt crisis, which could have systemic implications for the global economy. The domestic economy, after contracting for three successive quarters, recorded consecutive quarters of positive growth in the second half of 2009, and is expected to sustain this stronger performance in 2010 and 2011. Inflation has continued to trend downwards in recent months. Headline inflation has moved to within the inflation target range of 3 to 6 per cent for the first time since April 2007 when a year-on-year increase of 5,9 per cent was recorded in October 2009. After again breaching the upper limit of the inflation target range for technical reasons in December 2009 and January 2010, inflation has moved back to within the target range on a sustainable basis since February 2010. In this Monetary Policy Review the latest developments in inflation and the factors that impact on inflation are analysed. Recent monetary policy developments are reviewed, and the outlook for inflation and the inflation forecast are presented. In addition, two topical issues are addressed in boxes. The first box reproduces the clarification of the mandate of the South African Reserve Bank (the Bank) issued by the Minister of Finance, Mr P J Gordhan, in February 2010. The second box reports on research undertaken on exchange rate pass-through at the disaggregated level in South Africa using two distinct panels of data.