Central Bank  governor Gaye Erkan  highlights confidence in Türkiye’s inflation fight

Turkey’s newly-appointed central bank Governor Hafize Gaye Erkan said there is confidence in the government’s determination to fight inflation, as all units are striving to deal with the problem.  She gave her first  public statement  as the rookie governor, after a disappointing rate hike.


After meeting with the leadership of the Turkish Banks Association, Erkan told reporters in Istanbul that they had a very productive discussion with the banking sector.

They were briefed on the sector’s issues and their requests to simplify the macroprudential framework, said Erkan, who was appointed early this month following Recep Tayyip Erdoğan’s victory in Türkiye’s May 28 presidential runoff.


She expressed confidence that all economic units are working hard to combat inflation in line with the government’s economic targets, adding, “I am sure that we will tackle this in a stable, determined and goal-oriented manner.”

Erkan stressed the importance of price stability for financial stability, explaining that they would combat inflation by ensuring both price stability and financial stability.


Earlier on Friday, Finance Minister Mehmet Şimşek said Türkiye’s path to price stability would be gradual but steadfast.


Annual inflation eased to below 40% in May after touching a 24-year high of above 85% in October last year. The Central Bank of the Republic of Türkiye (CBRT) said inflation will come under further pressure.


The meeting came a day after the central bank raised benchmark interest rates from 8.5 percent to 15 percent, in a policy U-turn toward monetary tightening to counter higher inflation.


Erkan also listened to the bankers’ demands and suggestions for solutions to problems during the meeting, according to TRT.


Erkan promised restrictions on banks’  and companies’ FX transactions will be lifted eventually after an impact study.


Insiders report she was attentive to bankers concerns, displaying a good knowledge of central banking.


Yet, since her appointment she has been very shy in terms of articulating her plans for further monetary tightening.


Experts think she needs more time to build up her staff and formulate a joint strategy with economy czar Mehmet Simsek before attending to communications strategy.


Yet, with policy rates still very negative and monetary policy incredibly accommodative, quick action is need to stem the tide of the Turkish Lira, which by itself will feed the flames of inflation.


Ankara correspondent Erdal Saglam claimed in his latest YouTube vide that the economics team has reconciled to let dollar/TL rise to 30 from current 25, in order to limit rate hies to 20%.

Plans by Simsek and Erkan may also be shaped by Erdogan’s impending visit to Gulf states, where he will ask for FDI.  According well-informed pro-AKP Hurriyet columnist Hande Firat, Ankara hopes to attract up to $30 bn from Gulf states in terms of asset sales to ease the pressure on the lira and provide sustainable financing for the soaring current account deficit.


PA Turkey


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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.