CBRT: Real sector and banking sector are capable of managing risks
In its second Financial Stability Report of the year, the Central Bank of the Republic of Turkey stated that the banking and real sectors are in a position to manage exchange rate and interest rate risks. The report included assessments that the interest burden on households may increase slightly.
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The report's foreword included the words of CBRT Governor Hafize Gaye Erkan: "With the awareness that these are the most important prerequisites for our policy set to yield the desired results, we will proceed with determination, without compromising our price stability and financial stability goals."
Erkan stated, "We are continuing our determined fight against inflation with the strong monetary tightening we initiated in June."
Stating that interest rates at the short end of the yield curve have risen to levels consistent with the policy rate and that the transmission mechanism has strengthened, the CBRT predicted that the normalization in the yield curve outlook will continue.
Regarding the issue, the report stated, "In line with the transition from securities maintenance to the commission application, it is expected that pricing in the yield curve will form in a healthy manner under market conditions and fully reflect the expectations of market actors, in order to increase the functionality of the market mechanism."
Noting that the process of simplifying monetary policy has positively affected banks' balance sheets as well as the transmission channel, the CBRT stated that banks are structured to manage exchange rate and interest rate risks.
The report included the statement, "The liquid balance sheet structures, high profitability, and decreasing debt ratios of real sector firms show that they have the capacity to manage risks stemming from increases in financing costs."