6.45  6.61  6  4 2  January April Inflation Target  9  01 09  05 09  09 09  01 10  05 10  09 10  01 11  05 11  09 11  * Constructed through the linear interpolation method by employing the inflation expectations of various terms in the CBT Expectations Survey. Second survey term expectations of the CBT Expectations Survey. Source: CBT. 3. Inflation and monetary policy outlook  Distinguished Guests, After summarizing inflation and monetary policy developments in the first quarter of 2009, in this part of my speech, I would like to share with you the evaluation of the Central Bank of Turkey about the inflation outlook and monetary policy in the upcoming period. I will also add the Central Bank’s inflation forecasts presented in the Inflation Report, which is to be posted on our website soon. Firstly, I will briefly touch on the economic framework underlying these forecasts. In spite of all the measures taken to alleviate its effects on the financial system and economic activity, no clear indication yet to signal that the global crisis is coming to an end. Within this context, challenges regarding the emerging markets’ access to global capital still persist and the risk premium indicators of these countries remain highly elevated despite the limited rebound observed at the end of the first quarter of 2009 (Figure 17).
While the said decline was mainly driven by the SCT (Special Consumption Tax) reduction on automobiles, white goods and electronic products to be effected for a limited period of three months from March onwards, automobile prices, by displaying sharp decline, were chief determinants in prices of this group. The favorable effect of these reductions started to be observed on the domestic sales of automobiles and household goods in March (Figure 6). Moreover, the temporary VAT cut on furniture and IT products for a three-month period will have a short-term restraining effect on annual inflation in durables. Nevertheless, the lagged effects of the exchange rate pass-through on the prices of durable goods are expected to be partially seen following the depletion of current inventories. Table 1. Prices of Durable Goods (Quarterly and Annual Percentage Change) 2008 I  2009 IV  Annual I  1.58 2.81 -1.80  0.61  3.19  -2.49  4.13 7.60 -1.27  -1.31  9.17  -3.17  Electric and nonelectric 1.16 0.68 0.12 appliances  6.04  8.13  Automobiles  1.04 2.44 -3.63  -2.30  -2.56  -1.36  Other  0.04 0.89 1.02  2.27  4.29  0.36  Durable Goods (excl. gold) Furniture  II  III  -4.26  Source: TURKSTAT. CBT.