Governor Yılmaz's Speech in Press Conference for the Presentation of the Inflation Report-IV (Ankara, 26/10/2010)

Distinguished Guests and Members of the Press,

Welcome to the press conference held to convey the main messages of the October 2010 Inflation Report.

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 of inflation outlook and economic activity, which I will share with you in detail shortly, I would like to summarize the current global conditions that continue to be determinant of the domestic economic outlook.

Data released in the third quarter indicate that the recovery will be quite slow and gradual albeit a second contraction in global economic activity is not very probable. The marked decoupling between the developed and developing countries in terms of growth dynamics persisted through the second quarter; where global growth continued to be driven by developing countries (Figure 1). Meanwhile, the persisting negative outlook in the labor markets of developed countries confirms the slow pace of rebound in these economies on the one hand; and leads us to believe that the improvement in employment conditions will take a long time, on the other (Figure 2).