Türkiye says to continue tight monetary policy

New governor of Türkiye’s central bank Fatih Karahan speaks in Ankara, Türkiye, on Feb. 8, 2024.

Türkiye’s central bank will maintain its tight monetary policy stance until the inflation drops to a targeted level, said the bank’s new governor Fatih Karahan Thursday. (Photo by Mustafa Kaya/Xinhua)

ANKARA, Feb. 8 (Xinhua) — Türkiye’s central bank will maintain its tight monetary policy stance until the inflation drops to a targeted level, said the bank’s new governor Fatih Karahan Thursday.

“We are determined to maintain our monetary stance to ensure domestic demand progresses towards disinflation,” he said while speaking at a news conference to present the bank’s quarterly inflation report.

Karahan added that there is currently no consideration for an additional rate hike.

Since June, 2023, Türkiye has hiked its key interest rate from 8.5 percent to 45 percent, and signalled last month that the tightening cycle was complete.

“At the end of May, we will enter a disinflation process where we will see a rapid decline in annual inflation,” the governor said, explaining that strong capital inflows have been seen in Türkiye.

“Our policies have started to show their effects, inflation will decrease permanently, and price stability will be permanently achieved,” he said.

Karahan, former deputy governor of Türkiye’s central bank, was appointed as the bank’s new governor on Feb. 3 after Hafize Gaye Erkan announced her resignation following allegations of nepotism.

Türkiye’s annual inflation rate rose slightly to 64.86 percent in January from 64.77 percent last December, according to the official data released Monday.

Inflation topped 85 percent in October 2022 and remains above 60 percent, inflicting hardship on consumers in Türkiye. The high inflation, coupled with the depreciation of the Turkish lira, has squeezed the incomes of millions of workers and pensioners, who are struggling to make ends meet. ■