However, it can be said that this period of time is much shorter in case of the expectations channel, which is a part of the transmission mechanism and operates in a very effective manner in our economy. At this point, I would like to emphasize that the Turkish economy has entered a normalization process. As a matter of fact, in comparison with previous periods, the banking sector has a more robust structure and fiscal dominance has decreased considerably. As a result of this structure, any measures to be taken regarding the policy instrument should be evaluated in terms of the impacts of the monetary policy on inflation, rather than in view of the likely effects of these measures’ consequences on the above-mentioned areas. In other words, the increase in short-term interest rates, which are the policy instrument, should be evaluated merely as a necessary reaction of monetary policy for achieving the medium-term inflation targets. When the sub-indicators demonstrating the main trends in inflation are analyzed, it is observed that the targets for 2007 and 2008 seem achievable in light of the medium-term outlook as of the present date, as long as the cautious stance in monetary policy is maintained. Certainly, for the course of inflation to follow a path in line with the forecasts of the Bank, certain conditions need to be satisfied. In other words, there are some risks to the sustainability of the disinflation process in the medium-term.
Exchange rates displayed similar fluctuations and movements in the short term, surpassed their immediate levels, but the main tendency did not change. Due to the nature of the floating exchange rate regime and the exchange rate policy, similar movements may also be observed in the future, as a result of similar or different factors. The similar impacts of internal and external shocks on the exchange rate and interest rates and therefore, on the economy, will be weaker and last for a shorter period of time, on condition that the policies and implementations of the program continue without any compromise, the dynamism and the self-feeding nature of the reform process is kept in mind, the related steps are taken decisively in time and macroeconomic foundations get stronger. It should not be forgotten that the macroeconomic foundations, current policies, structural reforms and long-term expectations have an impact on the long-term movements of the Turkish lira. However, as the exchange rate is a variable that bears importance with respect to our economy and is a component of financial stability, the activity in the exchange rates is monitored closely by the Central Bank. It should be kept in mind that such movements in the exchange rate pose a risk as well as causing uncertainty. It is possible to protect us from the upward and downward fluctuations in exchange rates. The techniques for risk aversion should definitely be used. The İzmir Derivatives Exchange provides an important opportunity in this respect.