Turkey’s new Central Bank chief eyes simpler policy, price stability

In his first news conference since taking office last week, Murat Çetinkaya said he aimed for a simplification of the bank’s complex monetary policy at a “reasonable pace,” saying that would mean a narrower rate corridor and a single-rate policy.

Turkey’s Central Bank uses a complex system of multiple rates - known as an interest rate “corridor” - to set policy, which has at times confused financial markets.

Çetinkaya said the bank had left unchanged its mid-point expectation for inflation of 7.5 percent at the end of 2016, defying the expectations of some economists who had forecast a reduction of 50 basis points given lower food price inflation.

Announcing the bank’s quarterly inflation report, Çetinkaya also stuck to a mid-point inflation forecast of 6 percent for the end of 2017. He forecast inflation would stabilize at 5 percent in 2018.

He took over at the Central Bank a week ago. A day later, the bank trimmed the top end of its interest rate corridor by 50 basis points, in what some saw as a sign of more accommodative policy to come.

Çetinkaya said on April 26 that the Central Bank had taken steps to simplify its monetary policy, but that this should not be seen as monetary easing.