The authorities will strike a balance between keeping monetary policy tight to maintain price stability and cutting interest rates to encourage investment. The CBG targets reserve money as its main policy instrument but also uses interest rates to signal changes in policy. Over the forecast period the CBG is likely to cut the discount rate slightly as lower international commodity prices and strong domestic food production contain price pressures. This will filter through to commercial banks' lending rates, although-at 26.8%-lending rates will remain high, even by regional standards. Recent fiscal slippages have seen the CBG's independence compromised as statutory limits on direct lending to the government by the Central Bank have been repeatedly compromised. In 2011-12 this is unlikely to pose a major risk to price stability, as the fiscal deficit is expected to decline, reducing the impetus for, and the scale of, such breaches. However, in the event of large, unforeseen fiscal slippages, it could disrupt macroeconomic stability. The CBG will stay committed to a market-determined exchange rate, although it is likely to intervene occasionally in foreign-exchange markets for sterilisation purposes.