Governor Yılmaz's Speech in Press Conference for the Presentation of the Inflation Report-II (Ankara, 29/04/2010)

Distinguished Guests and Members of the Press,

Welcome to the press conference held to convey the main messages of the April 2010 Inflation Report, one of the most important communication tools of the inflationtargeting regime of the Central Bank.

The report typically summarizes the economic framework addressed in monetary policy decisions, elaborates global and domestic macroeconomic developments and presents the medium-term inflation forecasts, which have been revised in view of previous quarter developments, along with the monetary policy stance.

Before moving on to the Central Bank’s assessments on the inflation outlook and economic activity, which I will share with you in detail shortly, I would like to summarize the current global conditions. The recovery in global economic activity and the normalization of the international financial system have continued during the first quarter of 2010 (Figure 1). However, distressing levels of government debt, lingering problems across credit markets, and high levels of unemployment rates, all suggest that completely resolving problems across developed economies is not likely over the near term (Figure 2). Although the recovery across developing economies seems to be stronger, ongoing problems across developed economies—with their prominent role in global trade—still create downside risks for developing economies. Moreover, constraints related to external finance remains as a potential factor that might delay the recovery in many developing economies.