Turkey’s Central Bank Governor Fatih Karahan has reaffirmed the institution’s commitment to achieving its year-end inflation target of 24%, stating that the bank will take all necessary measures, including maintaining a tight monetary policy stance.
“We Will Do Whatever is Needed”
Speaking to state-run Anadolu Agency during meetings in New York, Karahan emphasized that the Central Bank of Turkey (CBRT) will not allow demand-driven pressures to derail its disinflation process.
“We will do whatever is needed to reach our year-end inflation target of 24 percent,” Karahan stated, adding that the bank will maintain tight monetary conditions until inflation is permanently reduced and price stability is secured.
Recent Rate Cuts and Inflation Outlook
Since December, the CBRT has cut its benchmark interest rate by a total of 750 basis points, bringing it down to 42.5 percent. Despite these cuts, inflation remains high at 39 percent, leading analysts to question whether the bank’s 24% target is achievable.
Karahan acknowledged that the tight policy stance would continue, ensuring that interest in the Turkish lira remains strong.
From Unorthodox Policies to Tightening Measures
Turkey’s monetary policy shift began in mid-2023, marking a break from years of unconventional policies that led to rapid currency depreciation and inflation surges. The current strategy prioritizes stabilizing the economy and restoring investor confidence in the lira and local markets.
While the year-end inflation target of 24% remains ambitious, Karahan’s statements indicate that the CBRT is prepared to take decisive action to maintain economic stability.