Our goal: Lowering inflation to 21% by year-end.
CBRT President Fatih Karahan recently delivered a presentation titled “Monetary Policy and Macroeconomic Outlook” to representatives from the business world and non-governmental organizations in Eskişehir. During his presentation, Karahan highlighted the positive impact of the determined stance in monetary policy on reducing inflation and strengthening the disinflation process. He emphasized the importance of coordination between fiscal policy and monetary policy to further support this process.
Karahan mentioned that with the measures taken in the first stage, inflation was prevented from rising to higher levels, and disinflation was established as of June 2024. The goal is to reduce inflation to 21 percent by the end of the year. He also mentioned the decrease in the risk premium, leading to a reduction of 7 billion dollars in the foreign interest burden annually.
The CBRT President emphasized the importance of maintaining a tight monetary policy stance until a significant and permanent decline in inflation is achieved. He mentioned that policy interest rates will be determined based on inflation realizations and expectations to support the disinflation process.
Karahan also highlighted the CBRT’s strong communication with the real sector, conducting face-to-face meetings with companies from various sectors regularly. He mentioned that insights gathered from these meetings are used in decision-making processes, helping to address both structural problems and cyclical developments.
Price stability was noted as crucial for sustainable growth, purchasing power, and productivity. Karahan stated that ensuring price stability will contribute significantly to social welfare and investment. He also mentioned the importance of balancing demand, normalizing pricing behavior, and improving expectations to reduce inflation.
Karahan provided insights into the improvements in reserves and the decrease in the current account deficit, reducing the external financing need. He noted the increase in capital inflows and the strengthening of TL deposits. He also highlighted the positive trends in exports and imports, emphasizing Turkey’s increasing market share in Europe.
In conclusion, Karahan highlighted the importance of global trade trends, ongoing support for the real sector, and the increase in rediscount loans to support small and medium enterprises. The overall outlook presented by the CBRT President reflects a cautious yet optimistic approach towards achieving sustainable economic growth and stability.
