The Central Bank aims to support financial stability and post-COVID-19 recovery by providing the needed liquidity to the financial system and the real sector while it also plans to minimize temporary adverse impacts stemmed from the pandemic on production and employment in the long term, according to the Central Bank Governor Sahap Kavcioglu. Speaking at a finance event, Kavcioglu said economic activities have globally started to recover in the post-COVID-19 recovery period. Touching on the inflation increase in August, the Central Bank Governor added: “Price surge in certain products has quite exceeded historical averages in the recent period. Considering products with the highest contribution to the inflation, they can triple or quadruple their average price increases over the last 10 years. Although this situation stems from increase in commodity prices based on the pandemic and developments such as supply constraints, these factors can’t be enough alone to explain price hike in some products. We evaluate these pricing behaviors to converge the pre-pandemic period again as the economic and social normalization accelerates.”
Speaking at the same event Deputy Minister of Treasury and Finance Sakir Ercan Gul told attendees the budget deficit should be cramped, and the current account deficit should be minimized in order to reduce the interest rate. “If we lower the policy rate without fighting against these deficits, it will cause capital loss,” Gul added.
USD/TRY which hit all-time highs after the bank actually reduced the policy rate, still has a high course. USD/TRY is traded at 8.86 this morning.
President Recep Tayyip Erdogan and his Russian counterpart Vladimir Putin meets today at Sochi. The two leaders are expected to discuss bilateral political and economic ties between Ankara and Moscow, current regional developments, and international issues, with a particular emphasis on Syria, Libya, and Afghanistan.
Natural gas and electricity tariffs will be announced by BOTAS Petroleum Pipeline Corporation and Energy Market Regulatory Authority (EPDK), respectively, this week on October 1. Price surge in global energy commodities is expected to be reflected on prices. New tariffs will be valid for the last quarter of the year.
DAILY AGENDA
The Turkish Statistical Institute (TurkStat) will release Economic Confidence Index for September (10.00 am). The index rose by 0.7% to 100.8 points in August.
TurkStat will release Services Producer Price Index for August (10.00 am).
The Banking Regulation and Supervision Agency (BDDK) will release the banking sector report for August. The sector made TRY 40.1bn profit in the first seven months of the year.
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