Turkey Governor Says Policy Tight Enough After Surprise Rate Cut

Turkey’s monetary policy stance remains tight enough even after its unexpected rate cut last month, Central Bank Governor Sahap Kavcioglu told a group of local investors and analysts, according to people who attended Thursday’s teleconference.

Asked whether he was concerned about the depreciation in the lira, the governor said the drop was due to the strengthening of the dollar index, citing other currencies that have lost value recently despite rate increases. The bank will continue to set its monetary policy stance at a level tight enough to rein in prices as soon as possible while acknowledging the impact of transitory supply-side issues, the people cited the governor as saying.

  • Current “tight policy” is restraining loan expansion and domestic demand, the governor said, noting that the 6.1% commercial loan growth level is below the average seen in past years
  • The governor said that the central bank pays attention to commercial loan developments as they support companies with high investment appetite
  • While headline inflation accelerated further in September, core inflation indicators remained lower than the headline, Kavcioglu said, adding that recent trends in core inflation indicators point toward a “slowdown”

Headline inflation accelerated for a fourth month to 19.58% in September. The main core index monitored by the central bank rose 22 basis points to 16.98% in the same month.


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The central bank will hold its next rate-setting meeting on Oct. 21.