CBRT President: Inflation will decrease after May 2024
CBRT Chairman Hafize Gaye Erkan gave a briefing on inflation and monetary policy at the GNAT Planning and Budget Commission.
Erkan said: “We will start to see a decline in annual inflation after May 2024 due to the base effect. “There will be a period of stability in 2025 and we will reduce inflation to single digits in 2026,” he said.
“Rising oil prices and the current deterioration in inflation expectations create additional upward pressure on inflation,” Erkan said, adding: “These factors indicate that inflation will remain near the upper end of the forecast range. in the inflation report at the end of the year.”
“Wages, taxes and exchange rates have a significant impact on inflation,” Erkan said, adding that “fuel will continue to be a risk factor for inflation.”
‘PURPOSE OF BALANCED PUBLIC EXPENDITURE’
Erkan stated that they have used and will continue to use all tools with determination in line with the objective of price stability: “The main inflation trends began to slow down from September. “We are determined to establish disinflation in line with the Inflation Report trajectory in 2024,” he said.
“Recent fiscal adjustments have had a short-term effect on rising inflation,” Erkan said, adding: “Measures to support public revenue were announced in July to balance financing needs arising from the earthquake and the increase in public spending”.
With this presentation, Erkan revealed the effects of increasing tax rates on inflation.
‘PRIVATE BANKS ARE ALSO CONTRIBUTING TO THE FLOW OF CREDIT’
Highlights of Erkan’s speech are as follows:
*A total of 700 billion Turkish liras of liquidity were sterilized through quantitative adjustment.
*The excess credit growth observed in the previous period has been replaced by a more balanced evolution; Both private and public banks have begun to contribute to this flow of credit.
*While the KKM balance decreased by 64 billion TL in the last four weeks, TL deposits increased by 465 billion TL and foreign currency deposits decreased by $3.2 billion.
*We anticipate that the effects of regulations on deposit composition will become more evident over time.
*The increase in reserves while the balance of exchange rate protected deposits decreases indicates that the transition strategy from KKM and foreign currency deposits to TL is progressing successfully and the desired healthy transition to TL has begun.
Source: AA
‘2024 WILL BE THE PERIOD OF DISINFLATION’
*We see the positive effects of our monetary policy strategy on the markets; Our reserves are strengthening, financing conditions are improving and implied exchange rate volatility is decreasing.
*We give our monetary policy response based on data and impact analysis, focusing on reducing the main inflation trend.
*We will begin to see the effects of the monetary adjustment process, which has been underway since June, clearly in 2024.
*For this reason, we define 2024 as the disinflation period. (DHA, REUTERS)