What matters on Friday, February 18

The Central Bank (CB) kept the policy rate steady at 14% in the second Monetary Policy Committee (PPK) meeting of the year, in line with the market expectations. Similar expressions as those made after the January meeting were included in the PPK statement. However, the bank included TRY investment credits and the liraization strategy in the statement and emphasized that the current account balance is expected to post a surplus this year. “While the share of sustainable components in economic growth increases, the current account balance is expected to post a surplus in 2022. The strengthening of the improving trend in the current account balance is important for price stability. The Committee believes that extending long-term TRY investment credit will play a significant role in achieving this target,” the statement read.

By emphasizing TRY investment, the Central Bank alluded to export-oriented sectors creating employment and selective loans, according to the University of Economics and Technology (TOBB ETU) Lecturer and Associate Professor Atilim Murat. The Treasury and Finance Minister Nureddin Nebati emphasized long-term loans in the New Economy Program. There has been no control mechanism and loans have been provided at a high level, especially through the Credit Guarantee Fund (KGF) during the pandemic. “These loans haven’t been used for investment and employment. That’s why they are acting more carefully this time,” Murat noted. “Export-oriented loans will be important for the current account balance. The Central Bank’s primary objective is to achieve and maintain price stability and fight against inflation. However, the duty to fight against inflation is conducted through the Ministry of Treasury and Finance,” Murat added. Stressing that Turkey experienced such loans in the 1990s, Murat said: “The bank seems to be heading towards a developmental central bank strategy. We performed similar tactics in the 1990s. The bank seems to be focusing on tools such as rediscount credits, and so on.”

The Central Bank thinks that investment credits will support exports of high technology products and capacity increase, according to Piri Reis University Vice-Rector Prof. Dr. Erhan Aslanoglu. Aslanoglu said the existing investment credit opportunities are limited and can’t achieve technological transformation alone, however, they may increase expansion investments to some extent. The Piri Reis University Vice-Rector also noted that permanent liraization can be achieved as a result of low inflation. “Liraization is unlikely to bring permanent low inflation unless inflationist conditions change and the foreign exchange (FX) supply-demand balance is permanently turned in the favor of supply,” Erhan Aslanoglu added. Regarding the bank’s emphasis on the capacity utilization surge, Aslanoglu says the capacity usage hike states that demand-driven inflation pressure may emerge. “This situation points out the necessity of a tight monetary policy,” he added. 

Turkey reported more than 92,000 coronavirus cases yesterday. Some 92,406 new coronavirus cases and 258 deaths due to COVID-19 were reported in the last 24 hours by the Health Ministry. On the other hand, the rise in the COVID-19 cases as a result of the Omicron variant has started to decline, according to Health Minister Fahrettin Koca. Speaking after the Coronavirus Scientific Advisory Board meeting, Koca said the number of daily COVID-19 cases dropped by 62% in Istanbul in the last 10 days. “This situation has the same course in other provinces,” the health minister added. The hospitalization rate across the country dropped by 28% in the last week. The board expects a significant fall in the COVID-19 cases in the next two weeks. 


Housing sales increased by 25.1% to 88,306 units in January, compared to the same month last year, according to the Turkish Statistical Institute (TurkStat).

Consumer confidence index dropped by 2.8% from 73.2 to 71.2 in February, month-over-month, according to TurkStat.

The net international investment position posted a USD 230.2bn deficit at the end of December 2021, according to the Central Bank.

The number of newly established companies increased by 16.6% and the number of closed companies dropped by 73.0% in January, compared to the previous month, according to the Union of Chambers and Commodity Exchanges of Turkey (TOBB).

Leave a Reply

Your email address will not be published.