Türkiye’s central bank chief on Tuesday stressed the monetary authority's commitment to achieving price stability without compromising economic growth amid aggressing tightening aimed at containing domestic demand that has been the main driver of inflation.
Addressing Parliament’s Planning and Budget Commission, Governor Hafize Gaye Erkan highlighted the key strategies employed by the Central Bank of the Republic of Türkiye (CBRT) to achieve the primary objective of price stability.
"We are resolutely utilizing all our tools in line with our fundamental goal of price stability, and we will continue to do so," Erkan said.
Official data on Tuesday suggested annual inflation rose 61.5% over 12 months ending in September, rising for a third consecutive month in response to recent tax hikes and Turkish lira depreciation.
The month-over-month increase in prices slowed to nearly 4.8% in September, compared to 9.1% in August and 9.5% in July.
Erkan pointed out that factors such as wages, exchange rates, and tax increases have considerably influenced the inflation rate.
Data suggest that the inflation rate is starting to peak after President Recep Tayyip Erdoğan named a new economic team of technocrats with Wall Street experience and broad support among foreign investors to embrace more conventional economic policies, including aggressive monetary tightening.
Last month, the CBRT raised its key interest rate by 500 basis points to 30%, tightening policy for four straight months. Since the June policy U-turn, it has hiked rates by 2,150 basis points to rein in inflation.
Erkan discussed the implementation of monetary tightening in conjunction with simplification within the macroprudential framework. This approach, she said, aims to strengthen the monetary transmission mechanism and reinforce steps taken to enhance macro-financial stability.
"Our determination to patiently implement a monetary policy that will recalibrate expectations, enhance confidence in the economy, and increase predictability is demonstrated through the steps we have taken," she noted.
Erkan emphasized that having inflation under control without sacrificing economic growth is possible. “Disinflation can also be achieved without compromising on growth,” she noted.