CBRT Governor Fatih Karahan's Statement on Inflation and Macroeconomic Outlook
Central Bank Governor Fatih Karahan announced that annual inflation dropped to 31.5 percent in August and the slowdown in the underlying trend continues.
Central Bank of the Republic of Turkey Governor Fatih Karahan delivered a comprehensive presentation on inflation and the macroeconomic outlook during the Citibank Turkey Investor Day held in Istanbul.
Inflation and Underlying Trend
Central Bank of the Republic of Turkey Governor Fatih Karahan made a comprehensive presentation on inflation and the macroeconomic outlook at the Citibank Turkey Investor Day held in Istanbul.
Stating that annual inflation receded to the 31.5 percent level in August, Karahan emphasized that the process of slowdown in the underlying trend of inflation continues with determination.
Supply Shocks and Price Pressures
Stating that supply shocks pulled headline inflation upward, Karahan noted that transportation and communication services are also among the factors slowing down the disinflation process.
It was stated that core goods inflation maintains its moderate course despite significant challenges encountered, and that there is observed additional room for disinflation in rents.
Economic Activity and Growth
Attention was drawn to the fact that, despite the slowdown in economic activity, quarterly growth gained momentum in the second quarter, and it was conveyed that external demand supports industrial production.
It was stated that high-frequency indicators point to the continuation of the slowdown in the third quarter as well, while credit growth exhibits a tendency to slow down across all loan types.
External Balance and Reserves
It was stated that the foreign trade balance showed further improvement in the third quarter and that tourism revenues decisively maintain their strong course.
Despite adverse external factors, it was reported that the current account deficit remains horizontal, the Turkish lira demand of domestic residents remains strong, and foreign exchange reserves preserve their high level.
Tight Monetary Policy Stance
It was emphasized that the tight monetary policy stance will continue to strengthen the disinflation process through demand, exchange rate, and expectation channels until price stability is achieved.
It was reiterated that steps regarding the policy rate will be decided in a manner consistent with intermediate targets, taking into account inflation realizations, the underlying trend, and expectations.