105 usd per barrel over the forecast horizon. however, oil prices continued to rise on the back of increasing international commodity prices, necessitating an upward revision ( figure 13 ). taking the average future prices in the first three weeks of july as a benchmark, our baseline scenario for oil prices has been revised to usd 140 per barrel. as for the future adjustments in electricity tariffs – to be made within the scope of automatic pricing –, they are forecasted to be in compliance with the assumption for the oil price. this revision has increased the end - 2008 inflation forecast by 1. 8 percentage points, and also added to the end - 2009 forecasts 0. 6 percentage points. figure 13 : crude oil ( brent ) ( usd / barrel ) crude oil 07. 08 05. 08 03. 08 01. 08 11. 07 09. 07 07. 07 05. 07 03. 07 01. 07 source : bloomberg. members of the press and dear guests, our revised forecasts envisage slightly higher food inflation in 2008 and 2009 compared to the april inflation report. although unprocessed food prices followed a relatively favorable course, processed food inflation is likely to stay at high levels for while, given the elevated course of agricultural commodity prices. against this backdrop, we have raised the assumptions for food inflation from 13 percent to 14 percent for the year 2008, and from 8 percent to 9 percent for the year 2009. these changes have led to an upward revision in our inflation forecasts by about 30 basis points, for both 2008 and 2009. the projections envisage gradually moderating food inflation throughout the forecast horizon. in this context, assumption for 2010 food inflation is 7 percent. according to the framework drawn so far, we now forecast inflation to be around 10. 6 percent at the end of 2008. under the assumption of a limited tightening towards the end of 2008, our medium term forecasts suggest that, with 70 percent probability, inflation will be between 5. 9 and 9. 3 percent ( mid - point 7. 6 ) at the end of 2009, and between 4 percent and 7. 8 percent ( mid - point 5. 9 ) at the end of 2010 ( figure 14 ). our inflation forecast for mid - 2011 is 5. 4 percent. we expect non - food inflation to be lower than these figures. figure 14 : inflation forecasts * forecast range * output gap uncertainty band for 2008 end - year inflation targets control horizon percent - 2 - 4 2011 - ii

assumption. assuming that policy rate stays constant for a while and gradually ease thereafter, our forecasts under this scenario suggest that inflation will be 6. 1 percent at the end of 2009 and around 4. 9 percent at the end of 2010. in sum, monetary policy will be conducted so as to minimize upside deviations from the targets should the upside risks materialize. downward surprises in food and energy prices, on the other hand, will be perceived as an opportunity to bring inflation back to target in a shorter period than envisaged in our baseline scenario. figure 15 : inflation forecasts, baseline and alternative scenarios baseline senario end - year inflation targets pessimistic senario optimistic senario percent 2011 - ii 2011 - i 2010 - 2010 - iii 2010 - ii 2010 - i 2009 - 2009 - iii 2009 - ii 2009 - i 2008 - 2008 - iii 2008 - ii 2008 - i source : cbt. distinguished guests, despite the expected decline in inflation in the medium term, uncertainties exist regarding the degree of inflation persistence. long - lasting supply shocks have been keeping headline inflation at elevated levels and thus increasing the risk of rising backward - looking schemes in the wage and price setting behavior. although current demand conditions contain the second round effects of the supply shocks, the exact pace of disinflation would still depend on the extent new inflation targets serve as a strong reference for economic agents. having this in mind, the cbt will continue to focus on enhancing the credibility of the new inflation targets. in this context, developments in the general pricing behavior and the underlying inflation trends will be monitored closely. international financial markets remain fragile and the credit conditions continue to tighten up. the eventual impact of the financial turmoil on the global economic activity is yet to be seen. moreover, rising commodity prices continue to exert pressure on global inflation. these uncertainties have been dampening the risk appetite and thus slowing down the capital flows to emerging markets, leaving these economies susceptible to shifts in the market sentiment. domestic uncertainties have exacerbated these effects, as manifested by the significant rise in the sovereign credit risk of turkey in the first half of the year, compared to the average risk premium of emerging economies. the cbt will not display a sharp reaction to temporary fluctuations in the financial markets, unless there is a threat to the medium - term disinflation trend and / or a significant worsening in the general pricing behavior. finally, i would like to state that our medium - term projections