quick overview on the monetary, financial and fiscal policies that turkey has implemented for economic stability. the global demand shock that came after lehman crisis brought steep declines in commodity prices with it. in response, expansionary monetary policy as well as supportive fiscal and financial policies were implemented at the same time. in terms of monetary policy, interest rate cuts and injection of bis central bankers ’ speeches liquidity into the markets, and in terms of fiscal policy, temporary cuts in consumption taxes could be mentioned as examples of the overall accommodative policy stance in turkey in 2009. with the help of these policies, the dynamics of the economy in turkey turned to positive in 2010 ; however, the increase in foreign capital inflows due to the exceptionally loose monetary policies by the advanced economies led to an excessive credit growth and an appreciation pressure on the turkish currency, widening the external deficit. in response to these developments that have repercussions on the current account and the financial stability, cbrt responded by widening the overnight interest rate corridor with the aim of deterring short - term foreign capital inflows. additionally, as part of the restrictive fiscal and financial policies, macroprudential measures were implemented in collaboration with other regulatory institutions and fiscal discipline was strengthened through tax hikes. when we come to 2011, euro area debt crisis took over the markets ; however, commodity prices displayed an upward trend as the global monetary expansion and its effects on the markets still continued. decreasing risk appetite led to capital outflows from developing economies. as the increasing energy prices and the pass - through from the depreciating currency started to put excess pressure on the consumer price inflation, cbrt responded this time with amt complemented with measures relaxing the financial markets ’ liquidity needs. on the fiscal front, cuts in wage and corporate income taxes differentiated across regions have been put in place last week to support the economy that is already growing at a moderate pace. on march 15, 2009 special consumption tax ( sct ) rates were decreased on vehicles to % 18 from % 37, and on durable goods and other electrical household appliances to % 0 from % 6. 7. these rates were increased on vehicles to % 28, on durable goods to % 2 and on other electrical household appliances to % 6. 7 on 16 june, 2009. by october 1, 2009, sct rates were brought back to the levels before march 2009. similarly, value added tax ( vat ) rates on furniture and it products were slashed to

% 8 on march 30, 2009, before being raised back to the initial rate of % 18 on october 1, 2009. bis central bankers ’ speeches dear participants, so far i have touched on the impacts of movements in commodity prices on inflation and economic growth. now i will talk about the impact of fluctuations in commodity prices on foreign trade balances. the dependency of the turkish economy on energy imports makes the current accounts balance more sensitive to changes in commodity prices. uncertainties regarding the global economy in recent years and the exceptionally loose monetary policies adopted by advanced economies, such as the united states, japan and the euro area, foreshadow the high probability of continued excess volatility in commodity prices. in the face of these developments, we welcome the recent concrete steps, as part of the medium term program in turkey, towards reducing the dependence on energy imports by shifting to domestically produced and renewable energy sources. these measures will hopefully ease the susceptibility of the current account to commodity prices in the long run. the key question in the short - run is how to smooth out the impact of the commodity prices on the domestic economy in the short to medium term, while there is a heightened degree of uncertainty regarding financial and real factors. in turkey, ex - refinery fuel prices, in addition to the 18 percent - value added tax ( vat ), are also subject to the special consumption tax ( sct ). special consumption tax, which is not only a fixed tax but also comprises a major part of the final prices of fuel products, helps to smooth out significant fluctuations in crude oil import prices. thus, consumers are less affected by such fluctuations. esteemed guests, it seems that uncertainties regarding commodity prices will continue to be an important factor to be considered carefully in policy implementations in the forthcoming period, too. i believe that the papers presented in this conference will guide us in overcoming the policy challenges we will face along the road. thank you very much for your interest and participation. bis central bankers ’ speeches