The Central Bank will continue to set the policy rate at a level above the inflation, preserving the strong disinflationary effect until there are strong indicators that point to a permanent fall in inflation, said the Bank’s Governor Kavcioglu during his opening speech at the Bank’s Ordinary General Assembly Meeting.
The Bank will also continue to use the monetary policy tools efficiently in line with the target to ensure permanent fall in inflation under duties and powers laid down by law, according to Kavcioglu. “I am aware that the low-inflation environment we target is a prerequisite for sustainable growth and employment growth,” he said, stressing that the bank’s 5% inflation target will be achieved with the awareness of institutionalism and a strong capacity for analysis.
Kavcioglu also emphasized that the Bank will ensure the strength and credibility of TRY with the determination of its fight against inflation.
“We will continue to use all the tools we have independently and efficiently in line with the main objectives,” the bank’s governor said.
Meanwhile, the one-week benchmark repo rate will also continue to be the bank’s main monetary policy tool and the bank will maintain to use the monetary policy within a simple operational framework, according to Kavcioglu.
He also added that the current high levels of inflation and expectations require tight monetary policy.
“We will make our decisions in a data-driven approach considering all data flow on macroeconomic developments including inflation. In the new period, we will continue to make our decisions with a corporate monetary policy perspective to ensure a permanent fall in inflation,” said Central Bank Governor.
“We should not forget that stability achieved in the general level of prices, a fall in country risk premiums, the start of reverse currency substitution, rising foreign exchange reserves, and a permanent decline in financing costs will positively affect economic and financial stability,” he added
He also stated that suitable groundwork will be laid for a continued rise in investment, production, and employment in a healthy and sustainable manner.
Realization of achievements in the economic reform package in the upcoming period has a crucial importance in terms of both permanent fall in inflation and sustainable growth, which will consolidate trust and stability, according to Kavcioglu.
“From now on, we will continue to use communication channels in the most efficient way in order to enhance policies’ efficiency and to receive stakeholders’ opinions and suggestions,” he said, stressing that they will share with the public the decisions to be made based on the principles of transparency and predictability.
April cut rate should not be taken for granted
Meanwhile, speaking to Bloomberg on Monday, Kavcioglu said that he didn’t approve a prejudiced approach to MPC (Monetary Policy Committee) decisions in April or the following months, that a rate cut will be delivered immediately.