8  BIS Review 103/2009  Figure 13: Interest Rate Developments (Percent) M a r k e t In te r e s t R a te s  26  P o lic y R a te s  24 22 20 18 16 14 12 10  0609  0409  0209  1208  1008  0808  0608  0408  0208  1207  1007  8  Source: ISE, CBRT. Figure 14: Medium-Term Real Interest Rates from the Yield on Government Securities* (Percent) 17 15 13 11 9 7  0709  0609  0509  0409  0309  0209  0109  1208  1108  1008  0908  0808  0708  0608  0508  0408  0308  0208  0108  1207  5  * 2-year real interest rates, calculated using 2-year nominal interest rates from the yield curve and inflation expectations from the CBRT’s Expectations Survey. Source: ISE, CBRT. However, the Central Bank considers that market interest rates do not properly reflect the current stance of the monetary policy and statements, and that yield curves should be more horizontal compared to the current situation (Figure 15). In this regard, the proper monitoring and correct understanding of the monetary policy perspective by economic agents, which I will now go on to explain, bears great significance.
As cumulative inflation during the first half of 2009 has been historically low at 1.83 percent, it is estimated that inflation will rise in the first half of 2010 due to base effects (Figure 26). As the impact of adjustments in taxes and administered prices made for the sake of budget balance will ease, we forecast that inflation will display a downward trend starting from the second half of 2010 and stabilize slightly below the end2011 target of 5.5 percent. It is critical to note that inflation would be less persistent and thus  BIS Review 103/2009  17  the economic recovery would be smoother if economic agents adopt these forecasts as a benchmark in their pricing decisions. I would like to underline that any new data or information regarding the inflation outlook may lead to a change in the monetary policy stance. Therefore, assumptions on future policy rates underlying the inflation forecast should not be perceived as a commitment on behalf of the CBRT. Risks Distinguished Members of the Press, In the last part of my presentation, I would like to mention the risks with respect to the inflation outlook in the upcoming period and give some information pertaining to the probable monetary policy strategy should these risks materialize. As I have mentioned earlier in my speech, despite having partially receded, the risks regarding the global economy are still important for the inflation and monetary policy outlook. In particular, ongoing problems in credit and labor markets pose downside risks on global activity.