The first conference of Türkiye Central Bank starts Thursday

The bank raises inflation forecasts for 2023
The first conference of Türkiye Central Bank starts Thursday
Türkiye Central Bank

The Central Bank of Türkiye ‘s Monetary Policy Committee is expected to hold its first meeting this Thursday to review inflation and monetary policy data, under the chairmanship of the new province of the bank Hafize Gaye Erkan.

Bloomberg reported that Erkan will seek through the meeting to convince investors that Türkiye is making serious attempts to rein in inflation after years of flexible monetary policies favored by Turkish President Recep Tayyip Erdogan.

Erkan will make its first official appearance after the meeting, and it has gained momentum, as the yield on Turkish treasury dollar bonds fell to its lowest level in two years, after Gulf investors pledged to invest in Türkiye more than $50 billion.

The yield on Turkish five-year bonds has fallen by more than 250 basis points since President Erdogan was re-elected for a new term in May. There have also been signs of an improvement in Türkiye’s foreign exchange reserve position.

Türkiye’s central bank is releasing its inflation forecast report, with local newspapers reporting that the Turkish central bank may raise its inflation forecast for 2023 this week.

The newspapers said the announcement is widely expected when Erkan presents its second inflation report in 2023 later in the week.

In May, the bank maintained its forecast for a 22.3 percent rise in consumer prices by the end of 2023 and 8.8 percent for 2024.

The Turkish State Statistical Institute announced on the fifth of this month that the inflation rate in Türkiye rose during June by 3.92 percent on a monthly basis, in contrast, the annual rate decreased to 38.21 percent, while it recorded 39.59 percent in May.

Last Thursday, amid a devaluation of the national currency and rising energy prices, the central bank raised its key interest rate from 15 percent to 17.5 percent.

Read: UAE, Türkiye sign agreements and MOUs worth $50.7 bn

The central bank raised interest rates in June for the first time to 15 percent from 8.5 percent.

However, experts said the bank would proceed with the increase cautiously to avoid putting too much pressure on any sector of the economy.

Despite the fact that the rate hike was lower than expected, the quantitative tightening signal seemed to calm the markets.

The Turkish newspaper “Dunia” said that a copy of the meeting of the Monetary Policy Committee confirms that the quantitative tightening will be in effect until the inflation rate improves significantly.

Since the appointment of the new finance minister Mehmet Simsek and Erkan, Türkiye has seen a change in monetary policy to become more traditional than that followed in Türkiye years ago.

The appointment of the country’s two prominent economic figures was accompanied by expectations of different economic management, including combating inflation and rising prices, and financial stability, by working on traditional fiscal policies designed to attract global capital to the country.

Turkish President Recep Tayyip Erdogan is seeking to bring in the much-needed investments needed by the economy, which were at the heart of his recent Gulf tour, which resulted in the signing of crucial economic agreements and big deals.

In the UAE, for example, where he completed his tour, passing through Saudi Arabia and Qatar, this resulted in the signing of memorandums of understanding and agreements with Abu Dhabi worth $50.7 billion.

In Saudi Arabia, after talks with Saudi Crown Prince Mohammed bin Salman, Erdogan signed several agreements for cooperation in investment and defense fields, most notably the purchase of a Turkish drone deal.

In Qatar, Erdogan met with Emir Tamim bin Hamad al-Thani. During their talks, the two sides stressed the desire to deepen bilateral cooperation by strengthening trade exchange and economic relations.

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