Admission from Central Bank Governor Karahan: Rent and education increases are double the inflation rate

Central Bank of the Republic of Turkey (TCMB) Governor Fatih Karahan, in his speech at the TÜSİAD High Advisory Council meeting, emphasized that a tight monetary policy stance will be maintained to bring inflation under control and ensure price stability. Karahan stated that the disinflation process is ongoing and that they will take decisive steps to ensure the permanence of this process.

Karahan noted that inflation in the rent and education sectors is at twice the level of the general inflation rate, stating that price increases in these areas are noteworthy. He added that inflation in other service items is consistent with headline data.

Karahan stated that achieving price stability is a critical prerequisite for long-term economic growth and an increase in social welfare. Expressing that economic growth follows a volatile course during periods of high inflation and that predictability decreases, Karahan said that this situation makes long-term investments difficult.

Karahan stated that with the achievement of price stability, interest rates can be kept at permanently low levels, and this situation will improve the investment environment. He also expressed that with the decline in inflation, household expectations will improve, and this will contribute to the disinflation process.

DECLINE IN LOAN INTEREST RATES

Karahan stated that cuts in the policy rate have lowered commercial and consumer loan interest rates. He said that an increase in the ratio of long-term loans would improve the investment environment and that they anticipate loan maturities will continue to increase during this process.

Finally, Karahan emphasized that if the inflation outlook deviates from intermediate targets, they will tighten their monetary policy stance and continue to take the necessary steps to ensure price stability.