Address by Mr T.T. Mboweni,Governor of the South African Reserve Bank,to the Worcester Rotary Club, 13 October 2006 Honoured guestsLadies and gentlemen 1.  Introduction It is perhaps not all that well known that I am an honorary member of the Rotary organisation. I was introduced to the Pinelands Rotary Club by Mike Osche, a colleague who retired from the Bank some years ago. I have reason to believe that Mike is in our audience tonight and thank him again for introducing me to the world of Rotary. The motto of Rotary, Service above self, is a notion that central bankers can easily associate with. Central bankers have to make and implement policy decisions without any cognisance being taken whatsoever of their personal interests. It should be remembered that my colleagues and I at the Bank are also subject to the effects of our monetary policy decisions. We thus also subscribe to the motto of service above self. I cannot but think of a previous Commissioner for Inland Revenue who apparently once remarked that he was cross with the tax man whenever he had to complete his own tax return. Central bankers also take policy decisions that may not always be in their own personal best interest. In my comments to you tonight I will reflect on some of the issues that came out of the Monetary Policy Committee meeting that ended yesterday where it was decided that the repo rate would be increased by a further 50 basis points. The full statement of the MPC is available on our website, so I do not want to repeat it here. In my remarks tonight I will touch on the issues of savings and growth and their relationship to monetary policy. 2. Rotary and monetary policy- what is the connection? For its 2006/07 year Rotary has chosen Lead the way as its guiding principle. This holds true for both the organisation and the Bank, as the Bank leads the way in monetary policy in South Africa. I know from personal experience that leading the way is not always the popular way. I often think about the Rotary 4-way test, which I should repeat for the sake of the non-members in our audience tonight: Of the things we think, say and do: Is it the truth? Is it fair to all concerned? Will it build goodwill and better friendships? Will it be beneficial to all concerned? In its activities, the Bank can relate to this test. Central bankers have to stick to the truth at all times, as this is an important way to gain monetary policy credibility. The conduct of monetary policy addresses the issue of fairness, in the sense that it is directed at ensuring the achievement of our inflation target. In containing inflation, the Bank ensures that monetary policy implementation is beneficial to all South Africans. While the Bank guards and values its autonomy, we have also paid particular attention to building ‘goodwill and better friendships’. My presence here this evening is one such endeavour in this regard. However, the implementation of monetary policy, particularly at times of changing interest rates, does not necessarily build goodwill, nor foster better friendships. At times of changing interest rates, there are always reactions from two groups of people. Savers and people living from the interest earned on their savings are pleased by interest rate increases. Borrowers, however, often feel aggrieved during periods of rising interest rates, because of higher interest payments. Whenever interest rates change we get an avalanche of mail from both sides, either congratulating us or berating us for not considering the plight of particular groups. I should add that it is not a coincidence that as interest rates rise, I tend to become more popular with the older generations. Unfortunately, farmers are usually perennially in debt, so I will have to try and keep out of the way of the farmers of Worcester tonight! On a more serious note, Worcester is in an agricultural heartland. As a community with its foundations firmly in the agricultural industry, it naturally follows that you will be interested in the impact of policy decisions on agricultural production, in your cas