The first one of these transactions is the daily foreign exchange purchasing auctions that are implemented transparently and under methods in accordance with certain rules to serve the Bank’s purpose of reserve accumulation. The Central Bank purchases foreign exchange from the market via  4  BIS Review 28/2007  these auctions when the supply of foreign exchange is abundant under a moderate reserve-increasing strategy. The second situation in which the Bank undertakes transactions is the direct interventions in order to prevent existing or possible excessive volatilities in the foreign exchange rates. These interventions are neither mechanic nor symmetric. The Bank evaluates all the changes occurring in the foreign exchange rates with regard to its own conditions and takes the decision for intervention accordingly. As a result of the foreign exchange purchasing auctions and the direct interventions implemented within the scope of the foreign exchange policy, net purchase of 44.8 billion USD from the market has been made in a period of five years as of 9 January 2007. Following the foreign exchange purchases embarked on as of April 2002, reserves of the Bank increased by 199 percent and reached 60.8 billion USD on 29 December 2006. Dear Guests, Now I would like to mention the growth performance of the Turkish economy and the things to be done in this respect. The Turkish economy has been growing consecutively for the last 19 quarters.
Considering from the viewpoint of fiscal policies, we should note that one of the factors ensuring the maintenance of the downward trend of inflation in the medium-term is the sustainability of fiscal discipline and the revenues policy consistent with the targets without hesitations. Within this context, we closely monitor the effects of the adjustments in the revenues policy and the primary public expenditures on inflation and inflation expectations. The achievements in structural reforms support the increase in efficiency via the improvements in competition and investment environments, contributing to the downward trend of inflation. The structural reform process has a determining effect also on the expectations. Unceasing maintenance of the steps in this area are important for the permanency of the downward trend in inflation. Even if a considerable improvement is observed today in comparison with the first half of the year, medium-term inflation expectations that are higher than targets are the other risk factors regarding the inflation outlook. This is due to the possibility of these expectations to bring about deteriorations in the pricing behaviors. Dear Guests, Although some political developments regarding the negotiations with the European Union may come to the forefront, and some interruptions and delays may occur, this process itself does mean  BIS Review 28/2007  3  convergence to the developed economies in economic terms. Together with the IMF, it also functions as an important anchor for the domestic and foreign economic units. This perspective, which is very influential on expectations, should be preserved.