The Turkish Central Bank said that its priorities next year will include a focus on rebuilding international reserves, describing larger reserves as necessary for effective monetary policy.
This goal is among the plans that were presented yesterday in the Central Bank’s monetary policy statement for the year 2024, according to Bloomberg News Agency.
The bank reiterated that the accumulation of foreign exchange will continue, depending on favorable market conditions, even if it intends to borrow smaller amounts from commercial lenders, through swap deals – a major source of hard currency for the monetary authority.
The re-election of Turkish President Recep Tayyip Erdogan paved the way for a shift towards traditional economic measures, which saw policymakers raise key interest rates fivefold and take steps to simplify regulations, a trend they pledged to continue next year.
On the 21st of this month, the Turkish Central Bank announced an increase in the interest rate by 250 basis points, to 42.5 percent, on repo operations for a week.
Before his re-election last May, Erdogan called for lowering the interest rate to below 10 percent, as he believed that lower interest rates would lead to lower inflation.
For her part, Governor of the Turkish Central Bank, Hafiza Ghaya Arkan, said that the country’s tight monetary policy has begun to affect consumer prices, but she expected that an inflation rate of less than 10 percent would not be achieved before 2026.
Last week, the Central Bank announced an increase in the interest rate by 250 basis points, to 42.5 percent, on one-week repo operations.
A statement issued by the bank, during the Central Bank’s Monetary Policy Committee meeting, confirmed that “a limited improvement in pricing behavior and inflation expectations appeared last November,” and that announced inflation “remained in line with expectations.”
He added, “Indicators in the near term point to the reversal of monetary tightening on financial conditions and the achievement of a balance in domestic demand.”
The statement stated that the improvement in external financing conditions, the continuous increase in reserves, support for balancing demand for the current account, and the increase in domestic and external demand for Turkish lira assets contribute strongly to the stability of the exchange rate and the effectiveness of monetary policy.
2023-12-29 18:37:57
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