Monetary tightening, simplification yielding results: Erkan

ANKARA

The steps taken within the scope of monetary tightening and the simplification of the macroprudential framework are showing their positive effects, Central Bank Governor Hafize Gaye Erkan has said.

“We continue our determined fight against inflation with the strong monetary tightening we started in June,” Erkan said in the bank’s regular Financial Stability Report, released on Nov. 16.

The share of Turkish Lira deposits in the financial system increases, while the decrease in the share of FX-protected and foreign currency deposits strengthens monetary transmission as well as financial stability, she noted.

“We will move forward with determination, without compromising our goals of price and financial stability. We will continue to communicate effectively in line with the principles of transparency and accountability.”

Following monetary tightening as well as the supportive measures of selective credit and quantitative tightening, loan growth has begun to be rebalanced, the bank’s report said. 

In response to the simplification steps taken in macroprudential policies, commercial loans have shown steady growth, and the commercial loan composition has been improving on the back of the increase in the share of export and investment loans, it added.

The financial debt ratio of the corporate sector continues to decline, while the positive outlook for financial indicators of firms is maintained, it said, noting that the financial leverage ratio of corporate sector firms has improved significantly thanks to the decline in financial liabilities in proportion to GDP.