Economy may grow by 4-5% in 2021 Q1: Agbal

Central Bank Governor Naci Agbal expressed the central bank’s monetary policy stance and economic outlook for the upcoming years in a meeting with economists. “Our most important and indispensable duty is to ensure lasting price stability. We will continue to implement the monetary policy within the framework of this goal,” said Agbal. 

Agbal stated that they are expecting a growth of 4-5% in the first quarter of 2021 considering the economic activity in January and February. He underlined that the bank will keep a tight stance in its monetary policy until 2023. “We will continue to pursue a tight monetary policy until we reach the target inflation rate of 5%,” he added. He expressed that tight monetary policy accompanied by the tightening of financial conditions will lead to a more moderate level of economic activity and demand. 

‘All decisions to be made with price stability in mind’ 

Agbal noted that predictability and tight stance of the monetary policy will lead to a decline in the inflation trend and Turkey’s risk premium, increased reserves and reverse currency substitution as well as a decline in financing costs. Stating that all decisions will be made with price stability in mind, Agbal stressed its importance. “Price stability is the basis of financial and macroeconomic stability,” he said. He stated that the central bank is planning to increase its reserves through foreign exchange purchasing auctions after the capital inflows are stabilized and the dollarization trend is reversed. “We believe that the participation of stakeholders in the process of disinflation and price stability and maintaining a holistic approach in this matter is essential,” said Agbal.

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