Central Bank/Fatih Karahan: Turkey committed to combat inflation, data will determine if additional tightening is needed
Karahan WDC
Speaking at a Peterson Institute panel in Washington DC, Karahan said that it’s not been easy convincing markets of policymakers’ commitment to curb inflation.
“We have done a lot and ready to do more to regain credibility and re-establish the policy rate as the primary tool,” he said.
https://www.youtube.com/watch?v=KaozMqSZlpo
Karahan asserts that current monetary tightening is sufficient to reach Bank’s inflation projections for end-2024 with a 3 mth lag, based on Bank’s monthly survey of market expectations, but: “MPC members are monitoring the incoming data to evaluate whether the CBRT's current stance is appropriate”.
[embed]https://www.youtube.com/watch?v=CE1HkXdjjoI&t=35s[/embed]
Headline inflation in Turkey is on track to exceed 70% by May, the nation’s central bank Governor Fatih Karahan said Tuesday, citing managing expectations as one of the main challenges.
Karahan, who was elevated from deputy governor to governor in February, also pointed to high demand and high inflation expectations as other challenges. These are “making the investment climate not so favorable,” he said.
A comprehensive tightening program that last saw the benchmark interest rate raised to 50% in March is helping normalize demand, he said, and added that the country is on track to reach its year-end inflation target of 36%. Markets, meanwhile, believe that the target will be achieved with a “three-month lag,” he said.
On the other hand, households’ expectations are more elevated and are “a lot less convinced” on policy action, according to Karahan. He said once headline inflation slows as of the summer months, that will support more savings in Turkish liras, according to Bloomberg.
