Central Bank Governor Karahan: Fund outflows turned to deposits, limiting risk

Central Bank of the Republic of Turkey Governor Fatih Karahan stated during his presentation at the TBMM Plan and Budget Committee that risks were limited as outflows from funds directed towards deposits. Karahan shared updates on liquidity management steps, inflation, and reserve developments.

Fund Outflows and Deposit Preference

It was announced that risks were limited as fund outflows in Turkey shifted towards deposits.

Tight monetary policy and the supportive macroprudential policy toolkit were effective in preserving the TL deposit preference of domestic residents.

Liquidity Management and Measures

Taking into account recent developments in financial markets, various measures were taken in liquidity management.

Funding provided through weekly repos was increased, and adjustments were made to banks' borrowing and required reserve ratios.

Declining Trend in Inflation

A decline was recorded in the underlying trend of inflation in core goods and the services sector.

Starting from July, annualized indicators followed a course below the current annual inflation.

External and Internal Risk Factors

External developments, energy-commodity prices, and expectations were highlighted as risk factors.

It was emphasized that disruptions in global supply chains and increases in freight costs continue.

Reserve Developments

Part of the decline in reserves experienced after the war has been recovered.

As of September, gross reserves rose to the level of 171 billion dollars, while net reserves excluding swaps reached 40 billion dollars.

Credit Developments and Receivables

Total credit growth declined from 35 percent at the end of February to 25 percent.

While the non-performing loan ratio in commercial loans hovers around historical averages, this ratio is higher in retail loans.