In other words, the impact of the fluctuations observed in financial markets in May and June on the consumption tendency is likely to be of a temporary nature. Therefore, the said impact is expected to lead only to a limited decline in total demand. Furthermore, it is estimated that the relative depreciation of the New Turkish lira will boost net foreign demand. Despite the likely positive impact of the demand conditions observed in the second half of the year on inflation, it does not seem possible to attain the 5-percent inflation target set for end-2006. However, as a result of the measures taken by the Central Bank from June onwards, we expect the secondary effects of the developments in exchange rates and commodity prices on inflation to remain limited, the likely pressure on 2007 inflation to diminish along with the recovery observed and the downward trend in inflation to continue. Parallel to the recovery - albeit limited - observed in inflation expectations in August and the relatively more favorable course of international liquidity conditions observed recently, the Monetary Policy Committee stated at its last meeting that the medium-term inflation outlook was much better compared to previous months and decided to keep short-term interest rates unchanged. However, as the risks against the disinflation process still persist, the cautious stance of monetary policy will be maintained. In this framework, if any development that would deteriorate inflation in the medium term arises, the Central Bank will not hesitate to resort to further monetary tightening.

Another area important for Islamic finance is the investment in research and development (R&D). The promotion of international strategic alliances through smart partnerships can create greater synergy that will bring about new approaches, new technologies and new areas of specialization. Such collaborative efforts amongst Islamic financial institutions would strengthen the ability to leverage on the industry's expertise. The introduction of innovative Islamic financial products in a specific jurisdictions can be expanded to other jurisdictions, which in turn, will contribute to broaden and deepen Islamic financial markets and thus strengthen the overall development of the Islamic financial industry. In addition, collaboration between academic researchers and the practitioners will enable the practical application of such research findings. In the area of education and training in Islamic finance, there is now a critical shortage of talent in the Islamic financial industry. Collaboration between training institutions is vital to developing the pool of expertise in Islamic finance that subscribes to common standards. Establishing a network of mutual co-operation and collaboration would strengthen the efforts among the institutions of higher learning across regions in the areas of curriculum development, research, training, exchange of ideas and information, and resources in Islamic finance. Such partnerships in connecting the knowledge communities between regions would facilitate this process. In the area of Shariah, the progressive convergence of Shariah views and rulings, the mutual recognition of financial standards and products across jurisdictions would be major driver towards greater international financial integration.