may be implemented sooner than implied by the baseline scenario. however, given that higher oil prices will also worsen the current account balance, a possible policy response will consider macro financial risks as well. therefore, the exact content of the adopted policy mix may vary depending on the outlook for external demand, capital flows and the credit growth. esteemed guests, we will continue to monitor fiscal policy developments closely while formulating our monetary policy strategy. our inflation forecasts assume that the ratio of fiscal expenditures to gdp will evolve as projected in the mtp. a revision in the monetary policy stance may be considered should the fiscal stance deviate significantly from this framework, and consequently has an adverse effect on the medium - term inflation outlook. increasing government saving, thus sustaining fiscal discipline, under current circumstances is essential to control the current account deficit driven by the divergence between domestic and external demand. therefore saving the extra tax revenues driven by the stronger - than - expected economic activity would not only reduce financial stability risks, but also enhance the effectiveness of the new policy mix. bis central bankers ’ speeches monetary policy in the period ahead will continue to focus on building price stability on a permanent basis. to this end, the impact of the macroprudential measures taken by cbrt and other institutions on the inflation outlook will also be assessed carefully. fulfilling the commitment to maintain fiscal discipline and strengthening the structural reform agenda in the medium term would contribute to the improvement of turkey ’ s sovereign risk, and thus, enhance macroeconomic stability and the price stability. maintaining fiscal discipline will also provide more room for monetary policy maneuver and support the social welfare by keeping interest rates permanently at low levels. i would like conclude my remarks by reiterating that implementation of the structural reforms envisaged by the mtp and the european union accession process remains to be of the utmost importance. thank you for your attention. bis central bankers ’ speeches

second quarter. however, the extent and the timing of the impact may vary depending on developments beyond the control of monetary policy. i would like to underline that as the central bank, we will closely monitor the lagged effects of our policy measures on price stability and financial stability, and will take additional measures if deemed necessary. in assessing risk factors and related monetary policy measures under current circumstances, we adopt a framework where both price stability and financial stability are taken into account. therefore, risk factors are not only assessed with respect to their impact on the level but also on the composition of the aggregate demand. this is because the level of aggregate demand is related to price stability, while its composition relates directly to financial stability. therefore, we evaluate risk factors regarding the global economy against this backdrop. although downside risks regarding the global economy have decreased compared to the previous reporting period, they still remain significant. problems in credit, real estate and labor markets in many advanced economies are yet to be completely solved. moreover, uncertainties regarding debt sustainability and the impact of a possible fiscal consolidation persist. meanwhile, rapid increases in oil prices may restrain global recovery. all these factors continue to feed downside risks regarding the pace of global growth. the possibility of prolonged period of slow global growth not only poses downside risks regarding external demand, but also keeps prospects for strong capital flows to turkey vigorous. should such a scenario materialize, a policy mix of low policy rate, high reserve requirement ratios and a wide interest rate corridor may be implemented for a long period. moreover, an outcome whereby problems in advanced economies intensify, leading to contraction in domestic economic activity, may require an easing in all policy instruments. in other words, we may consider joint cuts in policy rates and reserve requirement ratios. although downside risks to global economy remain notable, upside risks are also becoming more significant. major uncertainties exist regarding the lagged impacts of the exceptionally loose monetary policies implemented by advanced economies on global economic activity and inflation. if the global economy faces a faster - than - expected recovery in the upcoming period, inflationary pressures may arise sooner than envisaged in the advanced economies. materialization of such a scenario would mean a tightening by using policy rates as well as reserve requirements against higher global policy rates and demand - pull inflationary pressure. as i have previously emphasized, the outlook for oil and other commodity prices remains uncertain. should the increases in commodity prices persist and impose risks on achieving medium - term inflation targets, additional tightening