the macroeconomic outlook and our assumptions which constitute the basis for our forecasts. first, i will summarize the recent inflation developments, and then compare the short term forecasts in the october inflation report with the actual inflation data regarding the fourth quarter of 2011. there were a few developments in the interreporting period which led inflation to deviate significantly from october forecasts. more - than - envisaged increases in unprocessed food prices were an important cause of this deviation. the ongoing depreciation in the turkish lira amid the deterioration in the risk appetite was another factor leading to a deviation in short - term forecasts ( chart 8 ). bis central bankers ’ speeches chart 8. october 2011 inflation forecasts and realizations * shaded region indicates the 70 percent confidence interval for the forecast. owing to the lagged effects of the exchange rate pass - through, core inflation indicators remained at elevated levels during the final quarter ( chart 9 ). this mainly stemmed from soaring core goods prices, while the moderate course of the underlying trend of services inflation indicated a benign outlook in terms of second round effects ( chart 10 ). chart 9. chart 10. core inflation indicators sca - h and sca - i prices of core goods and services ( seasonally adjusted, 3 - month average, annual percent change ) source : turkstat, cbrt. ( seasonally adjusted, 3 - month average, annual percent change ) source : turkstat, cbrt. we see that economic activity remained robust in the second half of 2011, despite a slight deceleration. gross domestic product ( gdp ) data pointed that domestic demand proved stronger in the third quarter of 2011 compared to the outlook presented in the october inflation report ( chart 11 ). thus, we revised our output gap forecasts for this period upwards. growth composition became much more balanced as we expected ( chart 12 ). despite the weak course of the global economy, exports continued to increase, whereas the demand for imported goods and services maintained a downward trend. consequently, the contribution of net external demand to growth has been positive for the first time after a protracted period. bis central bankers ’ speeches chart 11. chart 12. final domestic demand exports and imports of goods and services ( seasonally adjusted, 2008q1 = 100 ) ( seasonally adjusted, 1998 prices, billion tl ) source : turkstat, cbrt. * estimate. source : turkstat, cbrt. indicators regarding the last quarter of 2011

overseers and supervisory authorities. the main objective of all these principles and responsibilities is to create a more secure and efficient structure for authorities of fmis that also includes payment systems. in this regard, i think that all authorities related to payment systems will do their utmost to achieve harmonization of these systems and apply the said principles in the near future. further international studies carried out in this field will focus on the implementation of these 24 principles. distinguished participants, cross - border connections of payment systems progressively gain importance in line with the increase in the volume of foreign trade. in the meantime, studies geared towards developing the international payment systems continue all around the world. i think this conference will significantly contribute to these studies and i very much hope that it will be a useful and fruitful conference. i would like to thank you all for listening. bis central bankers ’ speeches