driven wholly by gains in productivity and growth of the working age population, including immigration, we would not need to be as concerned about the potential for inflationary distortions. clearly, we cannot know for sure, because we are dealing with world economic forces which are new and untested. while we endeavor to find the proper configuration of monetary and fiscal policies to sustain the remarkable performance of our economy, there should be no ambiguity on the policies required to support enterprise and competition. i believe that we as a people are very fortunate : when confronted with the choice between rapid growth with its inevitable insecurities and a stable, but stagnant economy, given time, americans have chosen growth. but as we seek to manage what is now this increasingly palpable historic change in the way businesses and workers create value, our nation needs to address the associated dislocations that emerge, especially among workers who see the security of their jobs and their lives threatened. societies cannot thrive when significant segments perceive its functioning as unjust. it is the degree of unbridled fierce competition within and among our economies today - not free trade or globalization as such - that is the source of the unease that has manifested itself, and was on display in seattle a month ago. trade and globalization are merely the vehicles that foster competition, whose application and benefits currently are nowhere more evident than here, today, in the united states. confronted face - on, no one likes competition ; certainly, i did not when i was a private consultant vying with other consulting firms. but the competitive challenge galvanized me and my colleagues to improve our performance so that at the end of the day we and, indeed, our competitors, and especially our clients, were more productive. there are many ways to address the all too real human problems that are the inevitable consequences of accelerating change. restraining competition, domestic or international, to suppress competitive turmoil is not one of them. that would be profoundly counterproductive to rising standards of living. we are in a period of dramatic gains in innovation and technical change that challenge all of us, as owners of capital, as suppliers of labor, as voters and policymakers. how well policy can be fashioned to allow the private sector to maximize the benefits of innovations that we currently enjoy, and to contain the imbalances they create, will shape the economic configuration of the first part of the new century.

a timely manner seems beneficial because it reduces asymmetric information and uncertainty in financial markets. information about the financial stability framework and public evaluation of national balance sheets against the yardstick on international codes and standards offers investors an opportunity to assess risk better and arrive at more informed decisions. moreover, greater clarity about financial stability policy potentially simplifies the task of monetary and fiscal policy by establishing clear lines of responsibility and objectives. in an environment of greater trust, effective communication by the central bank facilitates greater flexibility to act by various agents in the economy. over the last few decades, it has been widely recognized that the maximum degree of independence for central banks, together with a clearly defined mandate, is the best way to ensure time consistency in the implementation of monetary policy and therefore guarantee stable prices. consequently, the 1995 constitution of uganda has granted the bank of uganda full independence in the pursuit of its mandate. in a democracy, transparency and accountability are the quid pro quo for that independence. in other words, it is the duty of independent central banks to be transparent, accountable and to communicate. the bou is made more accountable by clearly explaining our objectives and decisions to the general public, media, parliament and to the professionals in the financial markets. but transparency is not only a duty for the central bank. it is clearly also in the bank ’ s interest to embark on an effective communication as it contributes considerably to the efficiency of its policies. this helps to anchor the inflation expectations of the financial markets and the public. through efficient communication we can reduce inflation uncertainty and the costs associated with such uncertainty for consumers and investors. therefore it has immediate economic benefits for society. we achieve this by being clear about our definition of price stability and by being transparent in our actions. the economic agents and public need to be convinced that the central bank ’ s monetary policy decisions are consistently focused over time on achieving the announced aim. in a market - based economy the central bank can directly influence only short - term interest rates through its monetary policy instruments. however, consumption and investment decisions, and thus medium - term price developments, are to a large extent influenced by longer - term interest rates, which depend on private expectations regarding future central bank decisions and future inflation. it is important that these developments in longer - term rates support the objective of maintaining price stability over the medium term. this in turn requires that the central bank is regarded as credible and predictable. a central bank which does not succeed in communicating the principles underlying its monetary policy and is