I was honoured and delighted to have the opportunity to join the South African Reserve Bank as a Deputy Governor at the start of this year. As still very much a newcomer to the South African scene, I thought I might take this opportunity to share of few of my early impressions of the South African economy - and specifically of the operation of monetary policy, which is the particular responsibility of the Reserve Bank I should say at the outset that these impressions are very positive. There is, in my view, a great deal to be admired in the performance of the economy, and in the contribution monetary policy is making to promoting that performance; and in parallel, a great deal of progress is being made in pressing ahead with structural reform, across a wide front, in order to ensure that the economy can fulfill its potential in the future. Perhaps the most remarkable achievement that strikes me in the economic sphere is that the South African economy has continued to achieve steady and sustained growth over the past few years despite the global economic slowdown in the surrounding world economy. As the world economy has moved into slowdown over the past two years or so, the South African economy has continued to grow at around 3% - not, to be sure, as fast as one would hope to achieve in a more favourable world environment, but nonetheless a great deal better than many other economies have experienced. The current cyclical upswing in the South African economy, which began in September 1999, has now been in progress for 3½ years; and, looking ahead, the prospects are encouraging for the economy to continue to grow. How has this been achieved? There are no doubt many contributory factors, but I think an important one is the coherent and responsible macroeconomic policy framework which the authorities have steadily and consistently pursued over recent years, covering both fiscal and monetary policy. The fiscal side is not for me, as a central banker, to dwell on. But there is no doubt that the steady commitment the government has shown to keeping the budget deficit to low and manageable levels and to containing the burden of public sector debt has delivered real benefits in terms of a strong and sustainable structure in the public finances. The result, as evident in the Budget last month, is that, as the economy has grown and as revenue collection has strengthened, there has been enhanced scope both to reduce taxes and to continue building up essential spending programmes on a sustainable basis. In the monetary field, on which I want to say a little more, there has similarly been a commitment to a coherent and responsible framework steadily and consistently pursued. This is the inflation-targeting framework, which mandates the Reserve Bank to keep inflation low in order to deliver broad price stability across the economy as a whole. South Africa is, of course, not alone in setting price stability as the priority for monetary policy. Maintenance of low inflation is the universal aim that central banks around the world are set to pursue. But in pursuing this aim within the framework of an explicit low inflation target, South Africa is very much in the forefront of international best practice. Why this emphasis on low inflation and the commitment to price stability? At one level, the socio-economic damage that flows from a failure to control inflation is all too evident. High and volatile rates of inflation disadvantage the poor, who are least able to protect themselves from the ravages of inflation, to the benefit of those more able to preserve their standards of living. Inflation disadvantages in particular those living on fixed incomes, often the elderly reliant on pensions or savings. Across the board, inflation will tend to discourage savings and undermine the ability of people to plan their future personal finances on a prudent, long-term basis. By eroding values in a corrosive and insidious fashion, inflation can undermine sociably responsible behaviour and threaten the stability of society as a whole. Not for nothing h