In this context, the path consistent with the end-year target and the uncertainty bands defined for the end of each quarter of 2008 are given in Table 1. Table 1: Inflation path consistent with the end-year target and the uncertainty band March  June  September  December  Uncertainty Band (upper limit)  9.10  8.50  8.30  6.00  Path Consistent Target  7.10  6.50  6.30  4.00  5.10  4.50  4.30  2.00  with  the  Uncertainty Band (Lower Limit)  In case of realizations of the end-of-quarter figures outside the band, the Central Bank shall submit an open letter to the Government disclosing the reasons of the deviation and the measures already taken and to be taken for convergence to the target, and share this letter with the public. Recently, the Overview chapter of the Inflation Report has been restructured in line with accountability principle. Accordingly, the Central Bank has started using Inflation Report to share its view pertaining to inflation and monetary policy outlook and the necessary measures to be taken to keep inflation close to the target. Thus, besides being the main communication tool of the Bank, the Inflation Report has therefore assumed an important role with respect to accountability principle as well. Accordingly, there will be more references given to the Inflation Reports in the case of possible open letters in forthcoming periods.
While, it forms a basis for the accountability principle, the law does not specify the size of the deviation from the target that will require such an explanation. In other words, details of accountability mechanism are left to the Central Bank’s own initiative. Therefore, the Central Bank has established an effective and enforceable accountability mechanism by setting a symmetrical uncertainty band of 2 percentage points in both directions around the point target. As stated above, the inflation target has been defined over a very comprehensive CPI index. The CPI index also comprises of price items that are beyond the control of the monetary policy such as food, energy and administered goods. In emerging markets like Turkey, shortterm fluctuations in exchange rates can lead to unpredictable temporary fluctuations in inflation as well. Since a sudden reaction of monetary policy to factors that are beyond its control will increase volatility in macroeconomic variables, inflation-targeting central banks adopt a medium-term approach and allow temporary fluctuations in inflation as long as the expectations are under control. In this framework, the primary objective of setting an uncertainty band is to establish a measurable criterion that will enable to determine to what extent the deviations from the point target will be tolerated with respect to the accountability principle. In view of the above-mentioned factors, it has been decided to keep the uncertainty band at 2 percent for 2008 as well.