Turkey ‘could see further monetary tightening’

ANKARA/LONDON - Anadolu Agency

REUTERS photo

Turkey has implemented comprehensive and robust monetary tightening to contain rising inflation, Central Bank Governor Murat Çetinkaya said on Feb. 9.    

“We have increased the overnight repo and late liquidity window rates, delivering strong monetary tightening in order to contain the deterioration in the inflation outlook,” he said in a conference in London, the bank’s website stated.      

“We have also stated that inflation expectations, pricing behavior and other factors affecting inflation will be closely monitored and, if needed, further monetary tightening will be delivered,” he added.       

“This is a clear and stable tightening policy which will be preserved until we see a considerable improvement in medium-term inflation dynamics,” he said.       

Inflation could continue to rise in the short-term before gradually falling to 8 percent by the end of the year.    
Çetinkaya also highlighted the Turkish economy’s resilience to persistent shocks in recent years.      

“The resilience of growth in recent years can be attributed to factors such as prudent macro-prudential policies reducing the sensitivity of economic activity to capital flow volatility, dynamic domestic market, market flexibility of exports and the fall in energy prices,” he said.      

Although GDP contracted in the third quarter of 2016, more recent data has suggested that this will be short-lived and economic activity will recover moderately, Çetinkaya added.