Central Bank to do whatever it takes to achieve inflation target: Governor
NEW YORK
Türkiye’s Central Bank chief on Thursday vowed to take all necessary steps to meet a year-end inflation target.
"We will do whatever it takes to achieve our year-end inflation target of 24 percent," Governor Fatih Karahan told Anadolu Agency in an interview, saying that the bank will not allow demand conditions to impair the disinflation path.
Annual inflation has been on a decline since its peak in May 2024, Karahan noted.
He emphasized that the decline in inflation is primarily driven by a decrease in the underlying trend, supported by tight monetary policy, rather than base effects.
Karahan highlighted that this improvement in the underlying trend will continue to be a key factor throughout the rest of the year. Reaffirming the central bank’s commitment to its inflation target.
Goods inflation remains low, while services inflation, despite some rigidities beginning to dissipate, remains high, the governor said.
Türkiye's annual inflation rate eased for the ninth consecutive month in February, slowing to 39.05 percent, with consumer prices rising 2.27 percent month-on-month.
Stressing the importance of maintaining a tight monetary policy stance, Karahan underscored the necessity of keeping demand at disinflationary levels to ensure further progress in reducing inflation.
“We will ensure that demand conditions do not impair the disinflation process,” he said, noting that the conversion to Turkish Lira deposits has outpaced conversions to foreign currency deposits.
The data available for the first quarter so far show that retail sales remained strong in January, while vehicle trade and wholesale trade volume decelerated, Karahan said.
“Credit growth has been more modest compared to the final quarter. Meanwhile, data on credit card spending point to a weaker course in January and February,” he added.
Looking ahead, Karahan stated that the central bank’s priority will be setting the policy rate at a level that ensures the tightness required by the projected disinflation path, reiterating the bank’s unwavering stance on monetary policy.
In February, the bank lifted its annual consumer inflation forecast for 2025 from the previous 21 percent to 24 percent, while keeping its forecast for 2026 unchanged at 12 percent.
The bank, which started the easing cycle in December, delivering another 250 basis points this month, slashing the policy rate — the one-week repo auction rate — to 42.5 percent.
