In the third quarter, inflation numbers exceeded expectations due to various factors such as tax regulations, wage pressures, and fluctuating exchange rates. However, the Committee believes that these pressures have largely been absorbed. The enduring strength of domestic demand and the persistence of services inflation are also exerting an upward influence on inflation rates. The Committee is focused on attaining a disinflationary course in 2024, taking into account the risks posed by geopolitical developments affecting oil prices, it said in a media release.
The Committee noted the importance of foreign direct investment and a stable external financing environment in contributing to price stability. The positive impact of demand rebalancing on the current account balance and increasing interest in Turkish lira denominated assets from both domestic and foreign investors are seen as favourable signs.
The Monetary Policy Committee of Turkiye central bank has increased the one-week repo auction rate from 30 to 35 per cent.
The move aims to control rising inflation, anchor inflation expectations, and improve pricing behaviour.
Foreign investments and a stable external financing environment are seen as positive contributors to price stability.
In order to achieve a 5 per cent inflation target in the medium term, the policy rate will be determined to create the necessary monetary and financial conditions for a decline in the underlying trend of inflation. If needed, monetary tightening measures will be further strengthened in a timely and gradual manner.
The Committee is also focused on enhancing the functionality of market mechanisms by simplifying and improving the existing micro- and macroprudential frameworks. Monetary transmission mechanisms will be further fortified through additional steps to raise the share of Turkish lira deposits. Apart from the rate hike, the Committee plans to employ quantitative and selective credit tightening measures to support its monetary stance, the release added.
Fibre2Fashion News Desk (KD)
