Turkey’s central bank guv puts focus on inflation in first appearance

Bloomberg

Turkey’s new central bank Governor Murat Cetinkaya emphasized in his first public appearance that curbing inflation remains the bank’s top priority, signaling continuity in monetary policy. The lira gained.
At a press conference on Tuesday presenting the quarterly inflation report, Cetinkaya said the bank would do more to raise awareness about the importance to the overall economy of achieving permanent price stability.
“Achieving permanent price stability increases predictability in the economy and economic growth, investments as well as employment get affected by this positively,” said the new governor, who took office last week. “Our eventual goal is achieving/reaching price stability to strengthen economic stability.”
Cetinkaya maintained a cautious approach, keeping the bank’s year-end inflation forecast unchanged from January at 7.5% despite a sharp slowdown in annual price gains in the last three months. Food prices, which led the decline in inflation rate to 7.46% through last month from 8.81% at end-2015, remain volatile, said Cetinkaya, who took office last week.
“Judging by Cetinkaya’s first public speech, the bank’s policy stance remains unchanged in theory,” emphasizing price stability, Ali Kirali, strategic planning and economic research director at Odea Bank AS in Istanbul, said after attending the press conference. “Now it’s time for him to walk the walk.”
Cetinkaya’s predecessor, ErdemBasci, was frequently accused by the government of hindering economic growth with excessively high interest rates. Persistent attempts by President Recep Tayyip Erdogan and other senior government officials to pressure the central bank into cutting interest rates and prioritize growth over price stability have rattled markets for two years. In the first rates meeting he led, Cetinkaya cut one of the three main interest rates by half of a percentage point, in line with expectations.
The lira strengthened following Cetinkaya’s remarks and was trading 0.5% higher at 2.8314 per dollar at 12:37 p.m. in Istanbul.