6  BIS Review 67/2009  Table 2: Monetary Policy Committee (MPC) Decisions in 2008 and 2009 MPC Meeting Dates  Decision on Interest Interest Rate Rates (Percentage points)  17 January 2008 14 February 2008 19 March 2008 17 April 2008 15 May 2008 16 June 2008 17 July 2008 14 August 2008 18 September 2008 22 October 2008 19 November 2008 18 December 2008 15 January 2009 19 February 2009 16 April 2009  -0.25 -0.25 No change No change +0.50 +0.50 +0.50 No change No change No change -0.50 -1.25 -2.00 -1.50 -0.75  15.50 15.25 15.25 15.25 15.75 16.25 16.75 16.75 16.75 16.75 16.25 15.00 13.00 11.50 9.75  Source: CBT. Benchmark bond rates came down significantly driven by the policy rate cuts and the partially easing tensions in global financial markets (Figure 10). Moreover, the signal given by the Central Bank for possible necessity of maintaining downward flexibility for a long period of time coupled with moderate recovery in risk perceptions contributed to the decline in market interest rates. Figure 10: Interest Rate Developments (Percent) 27  ISE Bills and Bonds Market Interest Rate (Benchmark, Compounded)  25 CBRT Overnight Interest Rate (Compounded) 23 21 19 17 15 13 11 9 05 07  07 07  09 07  11 07  01 08  03 08  05 08  07 08  09 08  11 08  01 09  03 09  Source: ISE, CBT.
In this scenario, commodity prices are envisaged to go below the assumptions presented in the baseline scenario; credit conditions are projected to remain tight for a while and recovery in foreign demand would be a prolonged and slower process due to the late recovery in the global economy. Meanwhile, crude oil prices are projected to drop to USD 45 per barrel and remain at this level throughout the forecast horizon. This projection is above the one presented in the January Inflation Report, as OPEC announced that it would not allow sharp falls in oil prices. Meanwhile, it is foreseen that food prices inflation would remain below the baseline scenario and therefore will become 5.5 percent by the end of 2009 and 5 percent afterwards. Against this background, assuming that measured policy rate cuts continue throughout 2009, it is projected that with 70 percent probability, inflation will be between 3.9 and 6.5 percent with a mid-point of 5.2 percent at the end of 2009, and between 2.7 and 6.3 percent with a mid-point of 4.5 percent at the end of 2010. Furthermore, inflation is expected to go down to 4.2 percent by the end of 2011. To sum up, these forecasts indicate that in the case of a longer-than-expected slowdown in global economic activity, inflation would remain below the medium-term forecasts even if the measured policy rate cuts continue throughout 2009 (Graph 28).