Turkish Central Bank governor anticipates substantial decrease in inflation rate
Date
5/26/2024 8:29:32 AM
(MENAFN) Fatih Karahan, the Governor of the Turkish Central Bank, recently stated that after reaching its peak in May, the inflation rate in Turkey is expected to decrease significantly, signaling the country's transition towards disinflation. Karahan attributed this anticipated decline in inflation to the monetary tightening measures implemented by the central bank since last year.
Speaking at the global First Albaraka Summit in Istanbul, themed "Global Prospects for Islamic Economics: Fundamentals and Needs," Karahan outlined the factors driving the initial rise in inflation during the post-pandemic period. He pointed to supply chain disruptions and increased energy prices resulting from the conflict in Ukraine as primary contributors. However, he noted that subsequent inflationary pressures were driven by robust domestic demand, leading to a notable increase in consumption and gold imports.
Karahan emphasized the central bank's proactive approach in addressing these inflationary challenges, highlighting the gradual and robust monetary tightening measures initiated in June. These measures, he noted, have effectively tightened financial conditions, leading to an increase in returns on Turkish lira assets and a shift towards savings.
As a result of these efforts, Karahan highlighted several positive developments, including a decline in the contribution of consumption to economic growth, a weakening negative impact of net exports on growth, and a notable reduction in the current account deficit from around USD60 billion to USD30 billion. Moreover, he underscored that the central bank's reserves have increased by over USD40 billion, surpassing USD140 billion, while foreign currency liabilities have significantly decreased, leading to an improvement in foreign exchange liquidity.
Karahan's remarks underscore the Turkish Central Bank's commitment to addressing inflationary pressures and restoring stability to the country's economy through prudent monetary policy measures.
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