Although there are some inflationary risks as a result of the Central Bank's decision to cut interest rates in December, we continue to believe that the inflation outlook is fairly benign. Core inflation is low, the lira has remained fairly stable and the strong rebound in economic activity since mid-2009 is expected to moderate in 2011-12. As a result, we forecast that inflation will decline from about 7.5% at end-2010 to 5.5-6% at the end of 2012, that is, slightly over the Central Bank's 5% target but within the band of uncertainty of ±2 percentage points. Given our forecast that domestic demand growth will stabilise in 2013-15 and international oil prices will ease slightly, we expect inflation to decline to about 4% by 2014-15.