First of all, the support of the private consumption demand for inflation in a downward direction, caused by the tight monetary policy stance, is expected to continue in forthcoming period. Although the developments in the crude oil prices which have strong repercussions on the course of inflation has indicated a positive outlook recently, oil and energy prices still constitute a major risk factor that can affect inflation targets. Unprocessed food prices, which have a remarkable weight within the inflation basket, is another factor of uncertainty for the future course of inflation due to the fluctuations in its course by showing sharp moves owing to the seasonal conditions. Elimination of price rigidities in the services sector also bears great importance in the fight against inflation. Practices to increase supply and competition in this sector are needed. On the other hand, we see that the unfavorable effects of the fluctuation period on inflation are eliminated thanks to the completion of the primary effects of the depreciation of the Turkish Lira on inflation as of the end of 2006. Nevertheless, rapid changes in the global risk perceptions, international liquidity conditions and the resulting fluctuations that can be experienced in domestic financial markets are other risk factors that may cause the inflation go beyond the figures that we temporarily foresee.
These reforms, it is said, may work very well, but they should be postponed until later because they are not useful for exiting the current crisis. Firstly, some of these reforms, such as those conducive to hiring, would clearly have immediate effects in resolving the main problem of the current crisis, namely unemployment. Yet while it is true that other structural reforms would not have immediate direct effects but would yield future results, the decisions economic agents take today depend greatly on how they see the future. What has brought decisions to consume and invest today to a grinding halt is mistrust of the future; accordingly, if confidence about the future is restored, that would have highly beneficial effects not only in the medium run but now, in the present. In sum, tomorrow we'll broach again the financial and real-sector crisis facing us. And how to exit it. We’ll be reflecting on how to break the vicious circles of the lack of confidence. We'll discuss how it is naive to believe these vicious circles can be broken only in one place, concluding that what we need is a recovery in the confidence of all economic agents. These measures cannot be taken only at the national level; the crisis is a global one and attempts should be made to coordinate action to the full worldwide. That makes very strong demands on all multilateral fora and institutions, governments, politicians, central bankers, supervisors and all those with responsibilities in the matter.