of march, it became clear that a very significant monetary and fiscal response would be required. by virtue of my role as governor of the rba, i have been able to see first - hand how this support has been put in place. what struck me from the outset was the very strong sense of common mission from our political leaders, our regulators, our banks and the rba itself. that common mission was to support the australian economy through this difficult period. the level of cooperation and coordination was extraordinary and there was a real ‘ team australia ’ mindset. in my view, this reflects positively on both australia ’ s political system and our institutions. from the outset, there was a strong sense that we needed to build a bridge to the other side, when the virus is contained. as things have turned out, that bridge has had to be longer and stronger than we might have hoped would be necessary. even so, it has been the right strategy. at some point the virus will be contained and those foundations that have made australia such a prosperous country will still be there. we will be better placed to build on those foundations if we have limited the damage to the fabric of our economy and our society while we are battling the pandemic. in terms of the rba ’ s own response, that began with a cut in the cash rate at our regular meeting on 3 march. the reserve bank board then held an extraordinary meeting just two weeks later, where it decided on a comprehensive package that included : a further reduction in the cash rate to 25 basis points the introduction of a target on three - year australian government bonds of 25 basis points a term funding facility for the banking system under which funds can be provided for three years at 25 basis points the continued use of our open market operations to make sure that the financial system has a high level of liquidity the modification of the interest rate corridor system, with the rate paid on exchange settlement balances set at 10 basis points, rather than zero. this package is designed to keep funding costs low across the economy and support the provision of credit, especially to small and medium - sized businesses. to support these businesses, the term funding facility provides banks with an additional five dollars of low - cost funding for every extra dollar of credit extended to them. many other central banks have announced similar packages, although the bank of japan is the 2 / 5 bis central bankers'speeches only other central bank with a yield target ; in their case, it is a target for

erdem basci : latest economic outlook and macroeconomic developments in turkey panel speech by mr erdem basci, governor of the central bank of the republic of turkey, at the conference on “ policy responses to commodity price movements ”, istanbul, 7 april 2012. * * * distinguished guests, the global economic developments observed during the last decade are influential on the commodity prices. some of these developments were real factors directly affecting the supply and demand of these commodities. on the demand side, significant growth in demand for energy, food and raw materials of developing countries, led by china and india, became an important factor in commodity markets in recent years. likewise, the discrepancy between the paces of recovery of developed and developing countries in the aftermath of the global crisis and the global monetary expansion are observed to have reflections on the demand for commodities. the increasing income in developing countries enjoying robust growth broadly decreases the price sensitivity of commodity demand. as a result of production capacity shortfalls of exporting countries in the short run and these countries ’ reluctance to increase their production capacity, prices sometimes display excessive increases in the event of a setback in supply. on the other hand, the robust economic growth potential of developing countries implies that the demand for raw materials will continue to be strong also in the medium term. the key solution for imports - dependent countries due to having little natural resources lies in increasing the productivity in agriculture and energy sectors. increases in productivity especially in the agricultural sector are of vital importance and thus call for prompt action for the developing countries that are witnessing a shift in employment from agriculture to nonagriculture sectors. in a similar sense, measures for achieving more effective use of energy by companies and households, and for increasing the use alternative energy sources, especially renewable energy, should be the another issue among the priorities on the part of both advanced and developing countries, dependent on imported energy inputs. esteemed participants, a comprehensive literature has been guiding central bankers as to the type of monetary policy responses to be given to commodity price changes. the central banks following to the widely accepted advice put forth by this literature endeavor to contain the second - round effects of the commodity price increases, rather than the first - round effects. it is inevitable for commodity price increases to be reflected directly on prices, because of the high weight of goods linked to energy and other commodities in consumer price indices. that is why the first - round effects cause fluctuations in inflation. nevertheless, temporary movements in commodity prices, unless they