However, I would like to underline that given the capacity utilization rates which are still below pre-crisis levels and unemployment rates above pre-crisis levels, we assume an outlook where aggregate demand conditions do not impose a remarkable upward pressure on inflation by the first quarter of 2011. The absence of signs for overheating in the economy is mainly owed to weak external demand. In particular, the weak course of economic activity the euro area puts a cap to growth of external demand. Therefore, our medium-term forecasts are based on the assumption that external demand will continue to recover gradually and slowly, as was the case in the previous Report. In fact, global economy forecasts do not imply any significant changes in external markets in the first quarter. Accordingly, Turkey’s export-weighted growth index remained mainly unchanged from the previous reporting period (Chart 13). 6  BIS central bankers’ speeches  Chart 13. Export-Weighted Global Economic Activity Index*  * For methodology, see Inflation Report 2010-II, Box 2.1 “Foreign Demand Index for Turkey”. Source: Bloomberg, Consensus Forecasts, CBRT. Fiscal policy forecasts are based on the Medium Term Program (MTP) projections. Since primary expenditures remained largely in line with MTP targets in the first quarter, the fiscal policy outlook remained broadly unchanged. Hence, our forecasts are based on the assumption primary expenditures and debt to GDP ratios would continue to decline gradually and the risk premium would remain broadly unchanged over the forecast horizon. Furthermore, tax adjustments are assumed to be consistent with inflation targets and automatic pricing mechanisms.

A Fine Balance Speech given by Mark Carney, Governor of the Bank of England  The Mansion House, London 20 June 2017  I am grateful to Clare Macallan and Iain de Weymarn for their assistance in preparing these remarks, and to David Bailey, James Benford, Paul Brione, Bob Gilhooly, Jeremy Martin, Eleonora Mavroeidi, Alex Michie, Anisha Tibrewal, Kenny Turnbull, Simon Whitaker and Tom Wise for background research and analysis. 1  All speeches are available online at www.bankofengland.co.uk/speeches  I. Introduction My Lord Mayor, Chancellor, ladies and gentlemen. In recent weeks, we have been reminded of fine balances: in decisions, in parliament, in life. The fine balance between hope and despair. 1  Despair at the murder of Jo Cox. Hope in her remarkable life of service – an inspiration that lives on in her family, friends, colleagues and many admirers. Despair at the terrorist attacks in Manchester, Borough Market and Finsbury Park. Despair at the tragedy of Grenfell Tower. Hope in the heroism, resiliency and the community of the responses. Hope when we recognise our common humanity. The best tribute this City and this Country can give to the memories of those lost is to renew our shared commitment – whatever our differences – to promote the common good. This includes pursuing a Brexit, and building an economy, that works for all. ------------------------------------Since the prospect of Brexit emerged, financial markets, notably sterling, have marked down the UK’s economic prospects.