Developments following the initiation of policy rate cuts have confirmed our projections on the magnitude of the crisis and its impact on economic activity and on inflation outlook, and have justified our policy decisions. This, in return, enhanced  14  BIS Review 68/2010  the effectiveness of the monetary policy decisions on financial variables and expectations. Consequently, in 2009, determining role of Central Bank in shaping market interest rates has improved and hence, market interest rates came down to historic lows by following the monetary policy stance even during periods marked by high global risk perceptions. Furthermore, we observe that our policy rate cuts have also been effective on credit rates as of the second half of 2009. The downtrend in credit interest rates especially accelerated further following the issue of July Inflation Report which presented a solid perspective on medium-term policy, and on the back of the improvement in global risk perceptions, credit markets have witnessed favorable developments as of the last quarter of 2009. Interest Rate Developments Loan Rates  ISE Bills and Bonds Market and CBRT O/N Interest Rates  (Annual, Percent) 30  26  ISE Bills and Bo nds Market Interest Rate (Benchmark , Compounded)  21  CBRT O/N Interest Rate (Co mpo unded)  25 20 15  16 10  11  Housing Aut omo bile Consumer Bus iness  5  6  Source: ISE, CBRT. Source: CBRT. Esteemed Guests, 40.
We effectively used all policy instruments to maintain financial stability during the height of the crisis. As the crisis began to deepen in October 2008, we, by establishing a strong line of communication with the public about the details and the robust structure of the liquidity management strategy, have announced liquidity facilities to be provided to the markets step-by-step, in a clear and transparent way. Subsequently, by gradually introducing the announced measures for both Turkish lira and foreign exchange markets, we considerably removed the disturbances and volatilities in the markets. In this regard, we continued to implement measures that were taken as of October 2008 – when the crisis started to deepen – for ensuring smooth operation of Turkish lira and foreign exchange markets and supporting the corporate sector, in 2009 as well. In this part of my speech, I would like to outline the measures that we have taken. 41. The monetary measures implemented for Turkish lira during the crisis can be classified into two main groups: The first pillar of monetary measures was the implementations to ease the uncertainties in money markets caused by the crisis. In this regard, as of October 2008, we started to inject liquidity excessively in order to reduce potential tension in money markets and to completely eliminate volatility in overnight interest rates. However, at this point, I would like to remind you that the excess liquidity generated as a result of the implementation which was continued throughout 2009, was sterilized by overnight operations at the end of the day.