gdp dropped to 1. 7 percent in the second quarter. we estimate that the cumulative current account deficit will continue to decline in the third quarter. as we previously communicated, the current account balance improves during monetary tightening periods. in the upcoming period, we expect the improvement in the current account balance to continue, in line with our tight monetary stance. distinguished participants, in this part of my presentation, i would like to share our assessments of inflation. consumer inflation decreased to 48. 6 percent in october, significantly down from the peak level in may. 3 / 10 bis - central bankers'speeches except for october, global commodity prices remained on a downward trajectory and supported the disinflation process. the nominal exchange rate followed a mild course after the rise in august. as i have said before, demand also continued to lose pace, and came close to levels supportive of disinflation. moreover, inflation expectations continued to improve gradually. as we always emphasize, we closely monitor the underlying inflation. we evaluated our underlying inflation indicators in terms of unbiasedness, volatility and forecast performance. you can review the related box in our report. our analyses reveal that the performance of indicators varies according to different criteria. this fact underlines the importance of using different indicators to monitor the underlying inflation. when we examine the indicators that we monitor within the cbrt as a whole, we see that the underlying inflation continued to decelerate in october. core goods inflation remains low, driving the deceleration in the underlying inflation. the slowdown in services inflation, on the other hand, lags behind our projections. we see a gradual improvement here, which is more pronounced in items excluding rent. meanwhile, we witnessed a moderate course in certain services items sensitive to demand in october, which we believe to continue. on the other hand, in groups other than the core ones, the rise in energy prices strengthened in the third quarter. this was led mainly by the price developments in administered energy items coupled with the lump sum tax revisions. on the food front, the improving outlook in the third quarter was interrupted in october due to unprocessed food prices. in this period, we witnessed an upsurge in prices of fresh fruits and vegetables, which are relatively beyond the domain of monetary policy. on the other hand, food inflation excluding fresh fruits and vegetables remained lower. focusing on services inflation, the high course, led by rents and education groups with strong time - dependent price setting and backward -

greater use of their own assessments of risk as inputs to capital calculations. in that vein, basel ii will provide banks with a range of options for determining their capital requirements for credit and operational risk. this will allow both banks and supervisors to select approaches that are most appropriate for banks ’ operations and local financial markets. national authorities in the g10 countries will now continue their focus on adopting and implementing the new framework through domestic rule - making processes. consistent implementation of the new framework across borders through enhanced supervisory co - operation will become a critical and challenging task in the years ahead. we are also circulating the basel ii framework to supervisory authorities worldwide. we encourage them to consider adopting this revised framework at a time that they believe may be consistent with their broader supervisory priorities and readiness. yet we recognise that adopting basel ii in the near future may not be the first priority for supervisors in these other jurisdictions. they may wish to take some steps first to strengthen the capitalisation and risk management capabilities of their banks and to enhance the quality of bank supervision. the text of basel ii will be released today on the website of the bank for international settlements. as the product of three global consultations and several quantitative impact studies, the basel ii framework has evolved and strengthened considerably since it appeared first in 1999. on behalf of the g10 governors and supervisors, i would like to warmly thank all of those organisations and individuals who contributed to the process and supported the work of the basel committee by sharing their views over the years. i welcome now the remarks of my colleague, jaime caruana, governor of the bank of spain and the chairman of the basel committee. governor caruana has devoted considerable energy and efforts to completing the work on the basel ii framework that was launched so capably by bill mcdonough, the previous chairman of the committee.