CBRT President Fatih Karahan: “Our next strategy, our biggest priority is to fight inflation and accumulate as much reserves as possible depending on market conditions.”
Fatih Karahan, President of the Central Bank of the Republic of Turkiye (CBRT), said, “We have always signaled that we will do whatever is necessary. We tightened the market much more than the markets expected and showed how serious we are about disinflation.”
Karahan spoke at the event titled “Central Bank Management in Emerging Markets” organized by the Peterson Institute for International Economics (PIIE) and the Council on Foreign Relations (CFR).
Stating that the main problem that Turkiye faces in the macroeconomic environment is inflation, Karahan emphasized that the fight against inflation is extremely important.
Karahan said, “We are trying to reduce inflation and are following a comprehensive tightening program that started last June.” Stating that they have increased the policy rate to 50% since then, Karahan said that this provided some normalization in demand.
Stating that monthly inflation decreased throughout December and increased in the last few months due to minimum wage increases, Karahan said, “In general, we are on our way to reaching the inflation target that we have set as 36% for this year, 14% for next year and 9% for 2026. We want to get back to single digits.”
Stating that Turkiye wants to return to the 5% inflation target, Karahan said that they have made a lot of tightening, that demand is moderate and that they are monitoring the incoming data to evaluate whether the Bank’s current stance is appropriate.
“We showed how serious we are about disinflation”
CBRT President Karahan emphasized that their primary goal is to make the policy rate the main tool of monetary policy again and said, “We have always signaled that we will do whatever is necessary. We tightened much more than the markets expected and showed how serious we are about disinflation.”
Karahan said, “We have done a lot, and we are ready to do more, to rebuild the policy in which the policy rate is the primary tool so that we can rebuild confidence and better manage inflation expectations.”
Regarding inflation expectations, Karahan said, “Market participants expect inflation to be 36%, which is our target for the end of this year. In other words, they basically believe that we will reach our target with a 3-month delay.”
Karahan said that their next strategy and top priority is to fight inflation and accumulate as much reserves as possible depending on market conditions.
Karahan pointed out that geopolitical risks and the monetary policies of major central banks are two factors of concern for Türkiye, and said that the US Federal Reserve (Fed) and the European Central Bank (ECB) follow a policy of not making any interest rate cuts and that this is a more cautious approach in policy making.
Source: Trthaber / Prepared by Irem Yildiz