The Governor of the Turkish Central Bank, Hafiza Ghaya Arkan, announced on Thursday that the bank will continue to use all available tools until sustainable progress is achieved in reducing inflation.
She indicated that she expects the inflation rate to begin to decline in the second half of next year.
Speaking during a press conference in Ankara to announce the bank’s quarterly inflation report, Arkan said that inflation in the country will reach its peak in May 2024, and that the policy of monetary tightening will continue until there is an improvement in inflation, and she added that inflation will eventually return to single digits after… He starts to back away.
Arkan stated that inflation expectations are still risky, with extreme fluctuations in oil prices due to geopolitical risks.
She added that the rise in inflation in the country is driven by major shocks that occur simultaneously, but their impact on inflation is largely complete.
Arkan indicated that price stagnation in services will continue to put pressure on inflation, but expectations indicate that it will slow down.
The Turkish Central Bank Governor said that the bank raised its expectations for the inflation rate by the end of this year to 65% from 58% in previous estimates. It also raised its expectations for inflation by the end of 2024 to 36% from 33% in previous estimates.
Arkan stated that the Turkish Central Bank’s expectation for annual consumer price inflation by the end of 2025 has become 14% from 15%.
Inflation in Turkey reached 61.5% last September and is expected to continue rising until the second quarter of next year despite the central bank raising interest rates by 2,650 basis points to 35%.
Withdrawal of 350 billion liras of liquidity
Meanwhile, calculations conducted by two bankers – today, Thursday – showed that Turkey will withdraw about 350 billion liras ($12.4 billion) of liquidity from the markets with a new change in the reserves required for lira deposits protected from exchange rate fluctuations and other deposit accounts.
The Turkish Central Bank raised the reserves required for lira deposits protected from exchange rate fluctuations by 5 percentage points, according to the country’s Official Gazette.
The two bankers also said that since last June, with the implementation of the required reserve steps, the central bank has withdrawn more than one trillion liras of liquidity from the market.