4  BIS Review 67/2009  Figure 6: Domestic Sales of Automobiles (Seasonally Adjusted, Quantity) 45000 40000 35000 30000 25000 20000  0309  0109  1108  0908  0708  0508  0308  0108  1107  0907  0707  0507  0307  15000  Source: TURKSTAT, CBT. Core inflation indicators displayed a continual and accelerating downward trend in the first quarter of 2009. The CPI index excluding energy, unprocessed food, alcoholic beverages, tobacco products and gold fell by 2.66 percentage points year-on-year, while, with a further exclusion of processed food, the index dropped by 1.41 percentage points year-on-year. Even though the SCT cut in the second half of March was also influential in this development, the ongoing decline in the seasonally adjusted rates of change in both indices points to a continuing downward trend in inflation (Figure 7). Figure 7: Special CPI Aggregates H* and I* (Seasonally Adjusted, Monthly Increases, 2-Month Average) 1.4 H*  1.2  I*  1.0 0.8 0.6 0.32  0.4 0.2  0.21 0309  1208  0908  0608  0308  1207  0907  0607  0307  1206  0906  0606  0306  1205  0905  0605  0305  0.0  * SCT adjusted H and I series Source: TURKSTAT, CBT.
This indicates that traditional criteria used in determining credit rating and credit risk level may remain inadequate for accurately reflecting actual credit risk levels of countries at the times during which country specific characteristics come to the forefront. Figure 13: Relation Between CDS Rates and Credit Ratings  270  Hungary Indonesia Russia  Change in CDS (12 Sep 08 - 13 Apr 09)  220  170  S. Korea  Mexico Poland  120 Chile Czech Rep.  S. Africa  Colombia Brazil  70 Turkey 20 0  2  4 6 S&P Credit Ratings (1=A+, 9=BB-)  8  10  Source: Bloomberg, CBT. 8  BIS Review 67/2009  Countries that experienced a decline in their risk premia enjoyed room for policy rate cuts in the period of deepening financial crisis (Figure 14). In this period, contrary to many developing countries, the foreign exchange indebtedness of households in Turkey remained at low levels. This factor, accompanied by the resilience of the financial system and the restricted deterioration in risk premia during the global financial crisis, allowed the Central Bank of the Republic of Turkey to opt for policy rate cuts of large amounts.