MB President Karahan Reveals Year-End Interest Rate Expectation
MB President Karahan recently made a significant announcement regarding the country’s economic outlook. He emphasized that the policy interest rate would be set in a way that ensures the frequency required by the disinflation process.
Plans to Reduce Inflation to 21% by Year-End
President Karahan expressed confidence in the country’s economic policies, stating that the steady stance in monetary policy, along with balanced domestic demand, real appreciation of the Turkish lira, and improved inflation expectations, has contributed to reducing the monthly inflation trend. He further mentioned that the coordination in fiscal policy has significantly aided the disinflation process.
President Karahan highlighted the measures taken to prevent inflation from reaching higher levels and establish disinflation starting from June 2024. He stated, “We aim to reduce inflation to 21% by the end of the year.”
Monetary Policies and Interest Rate Messages
President Karahan emphasized that the policy interest rate would be determined based on inflation developments and expectations. He stated, “The Committee will make decisions with a focus on the inflation outlook, using a cautious and meeting-based approach. In case of a significant and lasting deterioration in inflation, our monetary policies will be effectively implemented.”
He also pointed out that price stability contributes to sustainable growth, increased purchasing power, and an improved investment environment. President Karahan stated, “Price stability enhances social welfare by improving the investment and production environment.”
Developments in Reserves and Current Account Deficit
President Karahan highlighted the increase in TCMB reserves between May 2023 and January 2025, stating that it was domestically sourced. He also noted a decrease in the current account deficit, mentioning that it decreased from 5% in the second quarter of 2023 to 0.7% in the third quarter of 2024.
President Karahan shared information about the decrease in Kur Korumalı Mevduat (KKM) balances and the increase in demand for Turkish lira deposits. He stated, “Between August 2023 and January 2025, KKM balances decreased by 111 billion dollars, while the share of TL deposits increased from 31.6% to 59.3%.”
Foreign Trade and the European Market
President Karahan highlighted the increase in exports and the decrease in imports between May 2023 and December 2024. He also mentioned that despite the weak import demand in Europe, the country’s market share is increasing.
In conclusion, President Karahan’s revelations provide valuable insights into the country’s economic strategies and expectations, shedding light on the future direction of monetary and fiscal policies to ensure economic stability and growth.
As a personal touch, imagine sitting down with President Karahan over a cup of coffee, discussing the intricate details of economic policies and their impact on the daily lives of citizens. Through this conversation, you gain a deeper understanding of the challenges and opportunities facing the country, fostering a sense of connection and shared responsibility for shaping a prosperous future together.
