CBRT Deputy Governor Cevdet Akçay makes statement on interest rate cuts

The Central Bank of the Republic of Turkey (CBRT) is not planning an early interest rate cut.

CBRT Deputy Governor Cevdet Akçay made statements to the Reuters news agency. He said that an early interest rate cut is not on their agenda.

"TIGHT STANCE WILL BE MAINTAINED"

Evaluating monetary policy steps, Akçay said, "An interest rate cut cycle is not currently being considered. When cuts do begin, there will be no room for doubt that a tight stance will be maintained. An early interest rate cut could create a risk of reviving inflation."

Emphasizing that monthly inflation will be monitored for the period when interest rate cuts begin, Akçay stated that the prerequisite is a permanent decline in monthly inflation.

"INFLATION IN JULY MAY EXCEED MARKET EXPECTATIONS"

Pointing to possible surprise increases in inflation in July, Akçay said, "Adjustments in taxes and administered prices will contribute 1.5 percent to monthly inflation in July. This increases the probability of a realization higher than the inflation expected by market participants in July."

Akçay also evaluated the swap steps taken recently. He pointed out that they have increased the functionality of the transmission mechanism.

Emphasizing that firms also have an important role regarding inflation, the Central Bank Deputy Governor stated, "If firms act based on Central Bank forecasts, the cost of the process will be lower."

News Source: 12punto