Bank commits to continue to implement floating exchange rate regime and strengthen foreign exchange reserves
Releasing Monetary and Exchange Rate Policy for 2022 on Wednesday, Turkey’s Central Bank maintained the medium-term inflation target of 5%, saying the monetary policy will be designed to gradually reach this target.
Next year, the bank will continue to implement the inflation targeting regime for ensuring price stability and the bank’s main policy instrument will continue to be the one-week repo auction rate, the bank stressed.
The bank underlined that it will continue to implement the floating exchange rate regime, and that free-market conditions will continue to determine exchange rates.
The Central Bank said it will continue to strengthen its foreign exchange reserves, increasing reserves in 2022 as long as market conditions are suitable.
The bank’s reserves amounted to $125.6 billion as of the end of November,the bank announced on Tuesday, while the foreign exchange reserves totaled $78.5 billion.
It will use reserve requirements as a supporting instrument for price stability and financial stability objectives, it said and noted: “In this framework, the Reserve Options Mechanism will be completely terminated in 2022, and costs of foreign currency liabilities will be increased while mechanisms to promote Turkish lira deposits will be prioritized.”
The bank stressed that it will continue to use the policy instruments effectively to safeguard financial stability.
It added: “Committed to the principles of transparency, predictability and accountability, the CBRT (Central Bank of the Republic of Turkey) will continue its policy communication and data dissemination in 2022.”