affect the general pricing behavior, do not affect the mediumterm outlook, but just remain as relative price changes. that is why those central banks pursuing monetary policy with a medium - term perspective prefer to refrain from sharp policy responses to the abovementioned first - round effects. understanding the sources of the price fluctuations prior to making decisions is a prerequisite for policy makers. commodity price changes with relatively more of a permanent nature may distort the general pricing behavior and initiate a wage - price cycle. this may entail prolonged upward movement in inflation in general and, accordingly, the high costs associated with this. therefore, to be able to contain the potential second - round effects due rises in commodity prices, it is important for central bankers to pay close attention to core inflation indicators and inflation expectations, and shape their communication policy in this direction. bis central bankers ’ speeches we, as the central bank of the republic of turkey ( cbrt ), are also in the position to carry out the abovementioned analyses. as a matter of fact, in our inflation reports as well as the summary of the monetary policy committee ( mpc ) meetings, we share with the public, our assessment of the nature of commodity price changes. in the inflation report published in january 2012, we made the following assessment on oil prices : “ another risk factor in the forthcoming period is the uncertainty regarding oil prices. although the weak course of the global economy dampens commodity prices, recent manifesting problems regarding oil supply pose upside risk to energy prices. should such a risk materialize, the cbrt will not react to temporary price movements, yet the bank will not tolerate any deterioration in expectations. ” likewise, at the monetary policy committee meeting held on 27 march ; after pointing out that “ uncertainties in oil prices pose upside risks to the inflation outlook ”, we underscored “ [ … ] we will continue to closely monitor supply - side developments and we will not tolerate any deterioration in inflation expectations ”. in view of the current level of inflation, i would like to re - underline on this occasion that it is essential to eliminate upside risks. to this end, last month, we implemented a “ strong, effective and temporary ” monetary tightening in order to eliminate the impact of recent cost developments on inflation expectations. we will closely monitor factors affecting inflation in the forthcoming period and additional monetary tightening ( amt ) will be repeated when deemed necessary. dear participants, at this point, i would like to give you a

bank of japan ’ s june report of recent economic and financial developments1 bank of japan, 13 june 2002. * the bank ’ s view * * japan ’ s economy shows signs of stabilizing with a distinct increase in exports and a pick - up in production, although domestic private demand remains weak. with regard to final demand, business fixed investment continues to decrease and private consumption, despite some resilience, remains weak as a whole. moreover, housing investment remains sluggish and public investment is on a downtrend. meanwhile, net exports ( real exports minus real imports ) are increasing markedly due to the recovery in overseas economies and also to the effects of restocking abroad, mainly in it - related goods. industrial production is picking up, reflecting the increase in exports and completion of inventory adjustment. the rebound in production is beginning to affect employment conditions, albeit marginally, with an increase in overtime working hours and in new job offers mainly for part - time workers. nevertheless, firms are still maintaining their stance on reducing personnel expenses from a longer term perspective and as a consequence, household income continues to decrease noticeably. in sum, employment and income conditions of households overall remain severe. turning to the outlook, exports are projected to continue to trend up mainly in it - related goods amid the ongoing recovery in overseas economies, especially in the u. s. and east asia. however, the pace of recovery is likely to become somewhat slower in the future than at present, as the effects from overseas restocking dissipate. supported by this upturn in exports and also by the completion of inventory adjustment, industrial production is expected to accelerate momentarily followed by a gradual uptrend. meanwhile, with respect to domestic demand, public investment is projected to follow a declining trend and private demand is likely to remain weak for the immediate future. nevertheless, if the increase in exports and production mentioned above continues, corporate profits will recover, particularly in the manufacturing sector, and this will gradually have a positive impact on domestic private demand such as business fixed investment. overall, japan ’ s economy is projected to stop declining as a whole since an increase in exports and production will lead to an improvement in corporate profits and in turn, domestic private demand. however, considering that forces restraining the economy stemming from excessive employment and debt are still persistently at work, it will take a while for the positive momentum to spread across the nonmanufacturing sector, small firms and households. the outlook for overseas economies,