World Bulletin / News Desk
Turkey’s Central Bank governor said on Tuesday the institution may implement additional monetary tightening “if needed”.
Speaking at a news conference ahead of the release of the bank’s quarterly inflation report, Governor Murat Cetinkaya said price stability was the "main objective".
"The Central Bank will continue to use all the instruments at its disposal to achieve the main objective of price stability.
“In the upcoming period, monetary policy decisions will be conditional on the inflation outlook," he said.
Cetinkaya said the bank will closely monitor inflation expectations, pricing behaviors plus other factors and "may introduce additional monetary tightening, if needed".
The governor said the inflation rate will fluctuate between 6.6 percent and 9.4 percent through to the end of 2017. He said the mid-point would be eight percent in 2017, up from 6.5 percent in the previous forecast.
"Given a tight policy stance that focuses on bringing inflation down, inflation is estimated to converge gradually to the five percent target. Inflation is likely to be eight percent in 2017, and stabilize around five percent in 2019 after falling to six percent in 2018," he said.
He also increased the bank's food inflation forecast to nine percent, up from seven percent.
Cetinkaya also said liquidity steps taken by the bank had produced positive results.
Commenting on rating agency S&P’s recent decision to cut Turkey's outlook to negative, Cetinkaya said he did not agree with the body’s report.
“It was hurried. Our job is to take these criticisms into consideration," he said.
The country's annual inflation rose to 8.53 percent in December from seven percent in November, according to a report from the Turkish Statistical Institute on Jan. 3.
On Jan. 24, the bank hiked its overnight lending rate, the highest of the multiple rates it uses to set policy, by 75 points following the Turkish lira’s sharp fall against the U.S. dollar.
The overnight lending rate, the rate banks use to borrow from the Central Bank overnight, rose from 8.50 percent to 9.25 percent, in line with expectations.
However, Turkey’s overnight borrowing rate, under which banks lend or deposit money to the Central Bank, remained unchanged at 7.25 percent. The one-week repo rate, known as the policy rate, was also kept at eight percent.
The Turkish lira has lost more than 20 percent of its value against the greenback since last November.
aaGüncelleme Tarihi: 31 Ocak 2017, 12:02