The simplification will contribute to the effectiveness of the transmission mechanism by enabling a more reliable assessment of the monetary policy stance. In this context, we mostly achieved our targeted gains. We are planning to finalize the monetary policy simplification within a reasonable schedule. I also would like to add that the direction and timing of the next step towards simplification will depend on the developments affecting the inflation outlook and financial stability. As CBRT, our main funding has continued to be provided via one-week repo auctions, while the 2 / 10  BIS central bankers' speeches  share of our marginal funding decreased (Chart 4). Our weighted average funding rate dropped to around 7.8 percent in October. Interbank overnight repo rates remained on the decline in line with the reductions in the upper band of the interest rate corridor. I would like to underline that our monetary policy stance will continue to depend on the inflation outlook in the upcoming period. As CBRT, we will maintain our cautious monetary policy stance by taking into account the developments regarding inflation expectations, the pricing behavior and other factors affecting inflation. Amid continued expectations for a prolonged low interest rate environment across advanced economies as well as the favorable course of domestic macroeconomic indicators and monetary policy simplification, the yield curve shifted downwards in all maturities from the previous reporting period, as shown on the slide (Chart 5). The fall was more pronounced in short-term interest rates due to the decline in our funding rate.

Thus, inflation excluding unprocessed food and tobacco posted a smaller decline, according closely with the upper bound of the July Inflation Report forecast (Chart 9). The inflation outlook remained benign amid waning cumulative exchange rate effects, weakening demand conditions and modest import prices. Cost pressures driven by producer prices remained subdued in this period. On the other hand, rising tobacco prices and adjustments in fuel taxes hampered the improvement in inflation. Therefore, consumer inflation fluctuated while annual core inflation remained on a downward track through the third quarter. After a slight increase in the previous quarter, annual food inflation recorded a sharp drop in the third quarter, standing far below the path projected in the July Inflation Report. The slowing food inflation was mostly attributed to the waning tourism demand, the contraction in exports to Russia and the measures placed on red meat. Food inflation excluding fresh fruits and vegetables fell to a five-year low of 4.78 percent in September (Chart 10). Meanwhile, despite the sluggish economic activity and the slowing food inflation, services inflation remained high mostly due to rising real unit labor costs and rent. 5 / 10  BIS central bankers' speeches  The underlying core goods inflation slowed down in the third quarter as a result of moderate exchange rates and weakening domestic demand. On the other hand, the underlying services inflation increased. Accordingly, the underlying core inflation indicators remained largely flat compared to the previous quarter (Chart 11).