What matters this morning

The Central Bank held an online meeting with investors within the frame of the bank’s ‘Investor Meetings’ program yesterday. Governor Sahap Kavcioglu said that the upward trend in exports, decline in gold imports and slowdown in consumer loans are expected to support improvement of the external balance. Kavcioglu also emphasized the necessity of tight monetary policy to rebalance the economy and provide a modest domestic demand and credit growth. The bank will continue to keep the policy rate above the realized and estimated inflation levels in a way to protect the disinflationist impact until strong indicators point out a permanent inflation decrease emerge and medium-term 5% inflation target will be achieved by 2023.

The Central Bank will implement monetary and exchange rate policies in line with the ‘Monetary and Exchange Rate Policy’ statement as the bank considers it as a roadmap for 2021. The bank will also protect the simplified operational monetary policy frame. “We believe that this frame strengthens transmission mechanism and enables establishment of monetary policy stance communication in a more simple and clearer manner,” Kavcioglu said stressing that the one-week-repo rate will continue to be the bank’s main policy instrument.

Kavcioglu also highlighted that early easing expectations in the markets which are not based on a valid ground, should completely be removed.

USD/TRY and EUR/TRY started to decline with Kavcioglu’s statements. They reached all-time highs after President Erdogan’s confusing statement promised hope regarding the interest rate cut. USD/TRY is traded at 8.62, while EUR/TRY sees 10.52 this morning.

Gold prices fell below USD 1,900 with the increase in interest rates of the U.S. Treasury bonds. Spot gold is traded at USD 1,892 per ounce. Oil prices, meanwhile, saw the peak of the last 1.5 years. Brent crude tested USD 72 this morning.


The Consumer Price Index (CPI) rose by 0.89% in May, compared to the previous month, according to the Turkish Statistical Institute (TurkStat). The annual inflation surged by 16.59% in May.

The Domestic Producer Price Index (D-PPI) increased by 38.33% in May, compared to the same month of the previous year, according to TurkStat. The D-PPI rose by 3.92% on monthly basis.

The Banking Regulation and Supervision Agency (BDDK) will also release the banking sector figures for April and the January-April period (2.00 pm).

The BDDK and the Central Bank will release weekly money and banking statistics (2.30 pm).

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