Will the 25 percent rent increase cap be lifted? Important statement from Vice President Cevdet Yılmaz!

Vice President Cevdet Yılmaz made assessments regarding the current agenda during a live broadcast on Habertürk.

Stating that Fitch Ratings' decision to upgrade Turkey's credit rating from "B" to "B+" while changing the outlook from "stable" to "positive" once again shows that Turkey is in a position it does not deserve and that this was a decision made in the right direction, Yılmaz said that they will continue to implement the Medium-Term Program (OVP) with determination and improve the investment environment, and as a result of all this, similar rating upgrades will come from other credit rating agencies.

Yılmaz emphasized that they prioritize the fight against inflation and that they have set out the policy set for this with the OVP, noting that they have implemented a strong program that includes monetary and fiscal policies and structural reforms in this regard.

Expressing that a significant decline in annual inflation will be seen in June and July, and that they are working specifically on inflation in the food and services groups, Yılmaz said, "We will see significant effects in the second half of 2024. There will be much lower levels in 2025. In 2026, we will reach single-digit inflation again, and we are determined about this. We are not saying this just for the sake of it. We have a plan, a program, and a policy set, and this is a process that is monitored transparently."

"ONE SHOULD NOT EXPECT THE EXCHANGE RATE TO DEVELOP ABOVE INFLATION"

Responding to the question, "There has been a decrease of 14.5 billion in the Central Bank's reserves in the last 10 weeks. This seems to get stuck on the question of 'will there be a policy change after the elections?'", Yılmaz explained that they follow a free exchange rate regime, that the Central Bank fulfills its duty to combat speculation, and that it will make interventions in a way that protects small investors.

Vice President Yılmaz continued as follows:

"If a country is fighting inflation, it means it is already making its own currency more attractive. Therefore, if necessary, our Central Bank is also taking tightening steps, as it has done recently. When it sees some speculative things, it can take some steps, even if temporary, or use other instruments. Here, what the small investor should especially know is that when you look at it from a broader perspective, in an environment where inflation is being fought, one should not expect the exchange rate to develop above inflation. There is no such thing; it is contrary to the nature of things. I am not talking about the nominal exchange rate, but the real exchange rate. The increase in inflation will also bring some increase in the exchange rate. Recently, inflation has been slightly above expectations, and this will be reflected in the exchange rate to some extent. This is also a normal thing. This should not be interpreted as there being excessive volatility in the exchange rate."

"We desire for the composition of our growth to shift towards an investment and export-oriented structure that will not be inflationary and will not increase the current account deficit," said Yılmaz, expressing that they aim to make consumption more moderate, increase domestic savings rates, and channel the increasing savings into more productive areas, thus wanting to both ensure a certain rate of growth and contribute to the disinflationary process.

WILL THE 25 PERCENT RENT INCREASE CAP BE LIFTED?

Reminding that the housing issue is very important in terms of social welfare, that they focus especially on primary housing, and that they have announced a major urban transformation program taking into account disaster risks, Yılmaz said, "In the coming periods, you will see our policies regarding the production of more social housing, both as the central administration and local governments."

Pointing to the importance of increasing housing supply, Yılmaz said that in addition to issues such as social housing and first-time home ownership, it is necessary to move towards a housing structure that is resilient to disasters and more effective in terms of energy with green transformation.

Vice President Yılmaz drew attention to the fact that the 25 percent cap on rent increases was a decision made to protect and look after tenants during an inflationary period, and noted the following:

"The essential thing, of course, is to reduce inflation and eliminate this need. Therefore, when you permanently reduce inflation, there will be no need for this anyway. But a decision on this matter has not been made yet. It is valid until the middle of this year. We have time until July. When the time approaches, an impact assessment will be conducted. The pros and cons will be examined. A decision will be made by looking at the course of inflation, the trend in rents, and everything else."