CBRT Governor Erkan speaks at 'hot money' meeting in New York: '2024 will be the year of disinflation'

The first of the CBRT's "Investor Day" events was held yesterday in New York, USA. The meeting was attended by more than 200 senior representatives from the world's largest investment funds, with a combined size of 50 trillion dollars.

At the meeting held at the JPMorgan Chase headquarters, CBRT Governor Erkan gave a presentation on monetary policy and the inflation outlook in Türkiye.

Presentations on macroeconomics, financial markets, and banking were also made at the meeting, which was also attended by Minister of Treasury and Finance Mehmet Şimşek via video conference, where he answered investors' questions.

According to information received from meeting participants, CBRT Governor Erkan stated at the meeting that they are determined to achieve disinflation, using the expressions, "The disinflation path is not just a projection; it is our measure of success. We are determined to achieve this."

MONETARY TIGHTENING

Hafize Gaye Erkan noted that they have significantly approached the level of monetary tightness required for the establishment of disinflation, that they reduced the pace of monetary tightening in December, and emphasized that they foresee completing the monetary tightening steps as soon as possible.

Erkan expressed her satisfaction with observing a decrease in consumption and import demand, a resulting improvement in the current account deficit and reserve growth, as well as a significant improvement in inflation expectations and a decline in the underlying trend of inflation, along with a strong transition to TL deposits since September.

Stating that their monetary policy strategy has been welcomed by the markets, Erkan said, "Türkiye's CDS has shown a sharp decline, falling by more than half compared to its peak in May. The exchange rate volatility signaled by the market has decreased significantly."

CAPITAL INFLOW

CBRT Governor Erkan emphasized that they will continue to increase reserves prudently with the support of accelerating capital inflows, and said that the simplification of the macroprudential framework and the increase in the share of TL deposits will continue.

Erkan noted that reserves have reached their highest levels of all time.

"THERE WAS A CAPITAL INFLOW OF 9 BILLION DOLLARS"

Hafize Gaye Erkan stated that capital inflows have accelerated recently and reported that over 9 billion dollars of capital inflow occurred during the November-December period.

Erkan used the expression, "Our program is working effectively, but our job will not be considered finished until sustainable price stability is achieved."

2024 WILL BE THE YEAR OF DISINFLATION

CBRT Governor Erkan stated that the banking sector has maintained its robustness and resilience throughout the monetary tightening process and that capital buffers are at sufficient levels, adding the following:

"In just 4 months, TL deposits increased by 2 trillion TL, KKM accounts decreased by 750 billion TL, and foreign currency deposits decreased by 3 billion dollars. Thus, while the share of TL deposits rose from 30 percent to 40 percent, the share of KKM fell below 20 percent. The deposit ratio is at a level where households are moving away from pulling consumption forward and are tending to keep the real value of their savings in TL. Our main commitment is to achieve disinflation. Along with this, we will continue to strengthen foreign exchange reserves, and we have already made significant progress in increasing reserves."

Erkan added that 2024 will be the year of disinflation.