##s support the positive outlook for the euro area economy. however, there are still a number of uncertainties surrounding the strength of the current upswing, such as those related to the future development of oil prices and to the impact of existing imbalances elsewhere on the world economy. turning to price developments, trends in inflation – with annual hicp increases of 2. 7 % in january falling to 2. 2 % in april, according to eurostat's early estimate – have been less satisfactory than expected a few months ago, not least as a result of higher oil prices. as stated on previous occasions, price developments in both 2000 and 2001, and again in recent months, have been shaped by a sequence of adverse but rather specific shocks to prices. these should unwind sooner or later and, in principle, such shocks should not affect the medium - term outlook for price stability. however, it is essential that past upward tendencies in prices – even though they partly resulted from a clustering of specific factors – do not become entrenched. recently published forecasts of price developments in the euro area, developments in indicators of inflation expectations and recent trends in wage settlements neither clearly confirm nor entirely contradict the risk of such entrenchment. at this juncture, it is therefore particularly important to remain vigilant with regard to the further evolution of the key factors determining the outlook for prices. on the basis of current information, it is still possible that annual hicp inflation rates will fall below 2 % in the coming months. however, the outcome is highly dependent on oil price developments. the rather protracted upward trend in services prices is also a factor to be taken into account. for next year, projections for price developments depend largely on the assumption of continued wage moderation. the outcome of the ongoing wage negotiations in some regions of the euro area could become a matter of concern. excessive wage increases could create additional cost pressure with potential consequences not only for prices but also – to an even greater extent – for employment creation and real gdp growth. regarding fiscal policies in the euro area, let me reiterate the views previously expressed. it is vital that those member states that have not already done so manage the transition to budgetary positions in balance or in surplus so that the stability and growth pact can operate smoothly and effectively in future. commitments made to achieving balanced budgets by 2003 - 4 must therefore be honoured by the member states concerned. the governing council calls upon member states to make faster progress in

growth rate of 50 percent ; the number of bank branches at the end of july 2010 stood at 1, 020 an increase of 24 branches from the end of december 2009 ; the number of bank accounts has increased by 35 percent from 7. 9 million accounts in july 2009 to 10. 7 million as at the end of july 2010. this impressive growth has been supported by the expansion of banks into new market segments, prudent risk management and enhanced economic prospects underpinned by a stable macroeconomic environment. the central bank expects the banking sector to continue on this growth trajectory. ongoing reform initiatives by the government and cbk will serve to further propel the banking sector to new frontiers of financial inclusion for more kenyans. for this reason, the central bank together with kenya bankers association has been keen to move in the directions that market requires support. mr. chairman : we need now to concentrate on reducing costs of doing business for banks so that we can bring down costs of financial services. for example, the recently introduced credit information sharing platform will enable banks to extend more credit to productive sectors boosting wealth and employment creation. the information sharing platform will help develop the required information capital that will support an adoption of a new collateral technology in the market and reduce the information search costs. this will be especially important for small and medium enterprises and individuals who have been constrained in accessing credit due to lack of physical collateral. however, the benefits of credit information sharing will only accrue if banks and other information providers ensure information availed to the bureaus is accurate and credible. it is therefore imperative that banks and their customers and licensed credit reference bureaus continue to work together to ensure accuracy and credibility of records. on its part the central bank will continue to work with other players to extend the reach of the credit information sharing mechanism beyond the banking sector. but so far, we are encouraged with the first batch of information sent to crb africa – 78 percent of it was accurate – with no errors. this shows that the information template reflects the true picture in the banking sector. ladies and gentlemen : the second area in reducing cost of doing business is the cost of rolling out branch networks to reach kenyans cost - effectively. this will work well with the introduction of agent banking. the cbk has so far licensed 5, 892 agents since the roll out in may 2010. ladies and gentlemen : the third area to lower cost of doing business is for you banks – you have to develop innovative products for