CBRT President Uysal said, “Inflation is estimated to be 8.2 percent at the end of the year and will decrease to 5.4 percent at the end of 2021.” said.
In his speech at the Inflation Report 2020-I Information Meeting, Central Bank of the Republic of Turkey (CBRT) Governor Murat Uysal said that under a tight monetary policy stance and strong policy coordination focused on reducing inflation, inflation is expected to gradually converge to the targets.
In this context, Uysal stated that it is estimated that inflation will be 8.2 percent at the end of 2020, and will stabilize at 5 percent in the medium term after decreasing to 5.4 percent at the end of 2021. He said, “Inflation will reach 6 percent at the end of 2020, with a probability of 70 percent.” “It is predicted that it will be between .2 and 10.2 percent (midpoint is 8.2 percent), and between 3 percent and 7.8 percent (midpoint is 5.4 percent) by the end of 2021.” made his assessment.
Uysal stated that inflation was in line with the forecasts in the period following the October report and said:
“We did not make any changes to the year-end inflation forecasts for 2020 and 2021, under a framework in which the monetary stance and macro policy coordination focused on ensuring the continuity of the decline in inflation will be maintained. We maintained the year-end inflation forecast at 8.2 percent.
We predict that the impact of the upward update in assumptions regarding oil prices, with the contribution of the ecel mobile application in fuel products, on the year-end inflation forecast will be limited to 0.1 points. The update in the output gap, which is expected to be slightly higher than the previous report’s estimates, increases the consumer inflation forecast by 0.1 points, and the increase in unit labor costs increases by 0.2 points. On the other hand, we calculate the lowering effect of the realization of the last quarter of 2019 and the expected improvement in the main trend of inflation throughout the year on the year-end inflation forecast as 0.2 points. “In addition, we estimate that some recent tax adjustments will have a 0.2 point downward impact on year-end inflation.”
Uysal pointed out that they predicted that the downward trend in inflation would continue as the cautious monetary stance and improvement in expectations continued, and said, “We have obtained these predictions in a context where global financial conditions will remain moderate and the gradual improvement seen in the country risk premium will continue in the coming period. The improvement in financial conditions will continue in the economy.” “It supports the recovery. In this context, we foresee an outlook in which aggregate demand conditions will not be inflationary.” he said.
2020 monetary policy
Evaluating the 2020 monetary policy, Uysal said the following:
“Many indicators that we follow regarding the main trend point to a course consistent with the targeted decline path in inflation. We evaluate that inflation, after remaining horizontal at current levels for a while, will gradually decline towards our year-end forecast, with the continuation of the general improvement in inflation expectations and the effect of the cautious monetary stance. We used the room for maneuver created by the improvement in the inflation outlook by making strong interest rate cuts starting from July. We started to see the reflections of this and other supportive policies such as reserve requirement regulations on financial conditions and economic activity. At this point, we evaluate that our current policy stance is compatible with the targeted disinflation path. January Monetary As we stated in the Policy Committee decision text, the cautious stance in monetary policy must be maintained in order for the decline in inflation to occur in line with the targeted path. Therefore, we will determine the policy steps and monetary stance we can take in the coming period, taking into account the indicators of the main trend, to ensure the continuity of the decline in inflation. “
“We follow global risks closely”
“The weakening of the foreign exchange effect was effective in the decline in inflation”
“Our 2020 food inflation forecast is 11 percent”
“It is too early to evaluate the effects of coronavirus”
“We care about stability in the exchange rate”
CBRT President Uysal said, “The Central Bank does not have a nominal or real exchange rate level target, but we care about stability in the exchange rate.” he used.
“The current trend points to a growth of around 20 percent in TL loans.”
CBRT President Uysal said, “The course of events indicates a growth of around 20 percent in TL loans, a horizontal course in foreign loans and over 15 percent growth in total for 2020.” he said.
About the independence of the Central Bank, Uysal said, “We make our decisions based on data and developments in inflation.” said.
“We are moving some of our units from the front to a building in Istanbul”
Regarding the move of the Central Bank to Istanbul, CBRT Governor Uysal said, “It has been on our agenda for a long time. We are moving some of our units to a building in Istanbul.” said.
Making an evaluation about the 6.8 magnitude earthquake in Elazığ, Uysal said that they expected the effects of the Elazığ earthquake on the economy to be limited and regional.
