CBRT Governor Fatih Karahan: Fund Outflows Did Not Weaken the Preference for TRY
Central Bank Governor Fatih Karahan stated at the IMF and World Bank meetings in Bangkok that fund outflows have not weakened the preference for the Turkish lira.
Central Bank of the Republic of Turkey Governor Fatih Karahan stated during a presentation at the IMF and World Bank annual meetings held in Bangkok that fund outflows have not weakened domestic residents' orientation toward Turkish lira assets, and the preference for TRY remains strong.
Presentation in Bangkok and Inflation Assessment
Central Bank Governor Fatih Karahan delivered a presentation titled "Macroeconomic Outlook and Monetary Policy in Turkey" at the annual meetings of the International Monetary Fund and the World Bank held in Bangkok, the capital of Thailand.
Pointing out that the underlying trend of inflation has slowed despite rising energy prices, Karahan stated that weak demand has mitigated inflationary pressures stemming from supply shocks.
Strong Preference for Turkish Lira Assets
Fatih Karahan emphasized that fund outflows have not led to a significant weakening in domestic residents' preferences for Turkish lira-denominated assets.
Stating that domestic residents' preference for the Turkish lira generally continues to follow a strong course, Karahan noted that proactive measures have limited potential risks.
Tight Monetary Policy and Disinflation Process
It was stated that the tight monetary policy stance, to be maintained until price stability is achieved, will strengthen the disinflation process through demand, exchange rate, and expectation channels.
It was noted that the policy rate will be determined in alignment with intermediate targets, taking into account realized and expected inflation.
Rent Inflation and Services Sector
Stating that disinflation continues in the services sector, Karahan conveyed that a easing has been observed in rent inflation and leading indicators point to the continuation of this slowdown.
It was stated that the declines in rent and education items were partially offset by increases in transportation and communication items.
Foreign Trade and Current Account Deficit Outlook
Stating that the external demand outlook for 2026 has weakened, Karahan reported that despite these challenges, the foreign trade deficit remains at moderate levels.
Expressing that tourism revenues are hovering close to previous year's levels, Karahan emphasized that the current account deficit has remained limited despite adverse external impacts.
Domestic Demand and Credit Growth
It was stated that high-frequency data confirm the continuation of the slowdown in domestic demand in the third quarter.
It was emphasized that macroprudential policies support the slowdown in credit growth, while fluctuations in gold prices increase volatility in reserve buffers.