guidance that – by and large – mirrored the one we had used for steering app expectations. this conditionality consists of both date and state - contingent legs. the smooth financial market reaction to the end of net asset purchases suggests that our enhanced forward guidance had the intended effect. our reinvestment policy reinforces the effects of forward guidance on policy rates. today, the stock of securities acquired under the app has reached such a sizeable level that our 2 / 5 bis central bankers'speeches reinvestment policy is sufficient to ensure the degree of continued duration extraction needed to keep a lid on term premia. 7 keeping the stock of securities constant also contributes to maintaining favourable liquidity conditions. ample volumes of excess reserves ensure that the overnight interest rate stays close to the floor of the interest rate corridor, which is provided by the deposit facility rate. this, together with forward guidance on the expected evolution of our policy interest rates, reduces rate uncertainty across maturities and thus adds to the compression of term premia brought about by the duration extraction channel. preserving significant monetary stimulus at the beginning of march this year the governing council was faced with a delicate call. on the one hand, the economic expansion was clearly losing steam and the sagging economy threatened to slow the pace at which inflation was expected to climb back to our objective. indeed, for the first time in a number of projection rounds, the march staff projection exercise had downgraded the inflation outlook uniformly throughout the horizon, including at the end point. on the other hand, there was no doubt that underlying conditions had come a long way since the start of our asset purchase programme, in terms of both the overall progress achieved and the resilience of the economy to negative shocks. the weaker economic momentum had not fundamentally undermined the conditions on which progress towards our aim ultimately depends, but it was slowing the pace of inflation convergence. in the light of the downward revisions to the macroeconomic outlook, additional measures were needed to preserve the ample degree of monetary accommodation supporting inflation convergence towards our aim. in march we adjusted our forward guidance on the key ecb interest rates, our main instrument, while announcing some other measures to preserve favourable lending conditions and the smooth transmission of monetary policy. long - term interest rates and, indirectly, financial conditions depend on market participants ’ expectations of the path that monetary policy interest rates are likely to follow. today, this path is constrained on the downside, as the overnight interest rate – which underpins the whole term structure of risk

the framework of modern risk management principles, against interest rate or exchange rate risk on their balance sheets. the izmir derivatives exchange provides an important opportunity in this respect. after focusing on the monetary and exchange rate policies conducted by the central bank and the developments in inflation and financial markets, now i would like to talk about the strong growth performance that has been displayed by the turkish economy since 2001 and the growth outlook. as you all know, in the first quarter of 2006, the turkish economy grew by 6. 3 percent in real terms. hence, cumulative real growth has been 36. 9 percent since 2001. the turkish economy has been growing for the last 17 quarters consecutively. i would like to draw your attention to the first point that is related to this growth process ; the dynamics and actors of growth has changed parallel to the structural changes in the economy. today, growing with public resources is no longer the case. the determinant of the growth rates is the consumption and investment of the private sector. while private sector real investment expenditures increased by 118. 2 percent in the period between 2001 and the first quarter of 2006, the said increase in the public sector was realized as 18. 6 percent. on the consumption side, expenditures of the private sector and the public sector increased by 32. 8 percent and 7. 5 percent, respectively, during the same period. meanwhile, machinery - equipment expenditures of the private sector have increased cumulatively by 217. 7 percent since 2001. these figures underline the fact that investment - based growth has also been increasing. the main contribution of the public sector to growth no longer comes through its expenditures, but through the role it undertakes as a strong supervisory and regulatory agent in the framework of good governance principles and also from its policies focusing on the goal of increasing competitiveness. the public sector ’ s need for borrowing from financial markets declined due to tight fiscal policies, which provided the private sector the opportunity to find lower - cost and longer term resources. another change observed in growth dynamics in line with the structural transformation in the economy is that productivity increases have become the most significant factor in growth. the cumulative productivity increase in the private manufacturing industry for the period between 2001 and the first quarter of 2006 reached 35 percent. while the said productivity increases support the growth process on the one hand, they improve the quality and contribute to the sustainability of growth on the other. the last issue i will touch on about growth factors has to do with the increased level of integration of the