a short history let me say something about the monetary policy actions since the start of emu. i think it is useful to distinguish four distinct phases. the first phase, which was the early stages of emu, was characterised by a combination of factors that had already been affecting the countries joining the euro area in 1998, namely downward risks to price stability. this led the governing council to reduce its monetary policy rate from 3 per cent to 2. 5 per cent in april 1999. the second phase was the period between late - 1999 and late - 2000 which was characterised by strong inflationary pressures, largely through high oil prices and relatively rapid monetary growth. the governing council undertook a series of monetary tightening measures during this period, raising interest rates by a total of 225 basis points. the third phase was the period may 2001 to june 2003 when the euro area found itself in a period of subdued economic growth following a number of global shocks. with inflationary pressures abating, the governing council reduced interest rates by a total of 275 basis points between may 2001 and june 2003. this was followed by a lengthy period of slow economic recovery and market uncertainty. expectations for economic growth remained moderate with the governing council leaving interest rates unchanged at 2 per cent until december 2005. the fourth phase was the period since then which has seen uncertainty in global markets dissipate and the outlook for economic activity improve. the governing council has raised interest rates by 25 basis points on eight occasions between december 2005 and june of this year. remarks on current monetary policy stance let me now turn to the current monetary policy stance. our assessment throughout the last year and one - half was that the outlook for economic growth had improved and that the recovery would strengthen and broaden. this indeed has been what has happened. another of our consistently repeated messages has been the need to guard against inflation risks coming from various sources, such as high and rising oil prices, increased pass - through to consumer prices, the risk of stronger than expected wage developments and, in the medium - to longer - term, strong money and credit growth. our actions, in raising rates eight times, including the most recent increase, have been consistent with these messages. with respect to the outlook for interest rates, i would emphasise that our future decisions are not predetermined and there is no pre - commitment to any future policy action. our position is clear and has been consistent over time. as we indicated last week, we will monitor developments closely and act, as necessary,

njuguna ndung ’ u : putting banking at the centre of the economy ’ s sustainable growth remarks by professor njuguna ndung ’ u, governor of the central bank of kenya, at the opening of the kba 3rd annual banking research conference, nairobi, 25 september 2014. * * * the chairman, kba governing council ; members of the kba governing council ; banks ’ chief executive officers ; distinguished participants ; ladies and gentlemen : it is my honour and pleasure to join you this morning at this very important conference that focuses on the role of the banking sector in the economy ’ s growth. it is therefore my singular pleasure to be invited to open the kba third annual banking research conference and to make some remarks at its commencement. first and foremost, i would like to commend the kba for its consistency in hosting the annual banking research conference. this is further evidence that the banking industry is keen on having its operations and strategic focus informed by analytical work. this being the third annual conference, the body of knowledge that the process has generated is without a doubt going to be beneficial to all stakeholders. research and its output is a “ public good ”. the broader benefits arising from knowledge cannot be restricted to those who have a direct interest in the research. research that improves the policy environment benefits all and indeed the economy at large. this year ’ s conference theme of “ putting banking at the centre of the economy ’ s sustainable growth ” is an example of this point. several papers focusing on finance and economic growth have confirmed the causal relationship. it is on that basis that i consider this conference ’ s theme on sustainability of this relationship to be inspiring, given that it provides an opportunity for deeper reflection taking us beyond the general finance – growth nexus. the kenyan economy has an ambitious real output growth target of at least 10 percent to enable the realization of the aspirations of vision 2030. the high and sustained growth targets will only be achieved through increased investment and increased productivity. the banking industry must intermediate and provide the funding required for the investment but even more important is long - term finance with attractive terms. ladies and gentlemen : the presentations lined up for this conference give me confidence that we are embarking on a conversation that will lead to the consolidation of the gains to the economy from the dynamism of the banking industry. let me make a quick reflection over the five areas around which the conference presentations focus ; • firstly, increasing support for agriculture is important and in the right