partners. our exchange rate policy, which entails a flexible, market determined exchange rate, is motivated by the need to ensure that our balance of payments is sustainable. our interventions in the foreign exchange market, such as that which we carried out last week, are intended only to dampen volatility in the exchange rate, and not to impede adjustments in the exchange rate which are necessary to maintain external balance. finally, i want to address the issue of inflation. the outturn for inflation in 2016 has been better than we had feared it would be at this time last year, when inflationary pressures were building up. annual core inflation declined during the first half of 2016 and for the last four months it has settled down at an average of approximately 5 percent, which is in line with our policy target for inflation. the better than expected inflation outturn in 2016 is attributable to a combination of the tightening of monetary policy by the bou in mid 2015, when we raised interest rates, and the relatively stable exchange rate since october of last year. when we look at core inflation outturns over a longer horizon, we can see that they have been very close to our policy target. over the last four years, annual inflation has sometimes been above 5 percent and sometimes been below, but it has averaged 4. 9 percent. i hope that you will agree that this demonstrates the effectiveness of our inflation targeting monetary policy framework. to conclude, ladies and gentlemen, i believe that the prospects for macroeconomic stability in the near to medium term are currently very good. in 2017 we can look forward to real gdp growth which is close to the economy ’ s medium term potential growth of around 5 percent per annum. with inflationary pressures firmly under control we can also be confident that annual core inflation will continue to trend around our medium term target of 5 percent. thank you for listening.

of the market share ; turning to bank of uganda, i wish to re - affirm that as a monetary policy and regulatory authority, the mission of “ maintaining price stability and a sound financial system ” remains paramount. on the monetary front, the recent unfolding inflationary pressures have been proactively responded to using a package of instruments, which include ; i ) pursuing a tight monetary policy stance to regulate money supply ; ii ) tactical interventions into the foreign exchange market to manage and minimize sudden fluctuations in the exchange rate ; on the regulatory front, the following have been applied to ensure soundness and stability of the financial sector : i ) conducting regular on - site examinations and off - site surveillance of supervised financial institutions in order to initiate prompt corrective actions as warranted ; ii ) enhancing risk management framework in all supervised financial institutions ; iii ) implementation of risk - based supervision to foster timely identification, measurement, monitoring and controls of risks inherent in the financial sector ; iv ) periodic reviews of the legal and regulatory framework to ensure update with current developments in the financial sector ; v ) aligning the regulatory framework with international standards especially after the recent global financial crisis ; vi ) to facilitate innovation through amendment of the legal and regulatory framework to permit the following : i ) implement mobile money banking ; ii ) bancassurance ; iii ) islamic banking & finance products. rolling out guidelines for financial literacy and consumer protection. bis central bankers ’ speeches