Automotive Exports August 2023

Türkiye’s path to price stability to
be gradual but steadfast
Treasury and Finance Minister Mehmet
Şimşek reiterated the Türkiye’s commitment
to curb price increases and ensure financial
stability, a day after the central bank hiked
its key policy rate for the first time in over
two years.
The central bank raised its one-week repo
rate by a hefty 650 basis points to 15% ,
marking a change in course after two years
of monetary easing in which the key policy
rate had been cut to 8.5% from 19% in 2021.
Addressing reporters in Ankara, Şimşek, who
is highly regarded by financial markets, said:
“The path toward price stability is going to
be gradual but steadfast.”
“Our economic policies aim to achieve price
stability and financial stability in the short
term,” Şimşek said before departing for
Istanbul. “We are determined to reach these
objectives.”
The central bank said it would go further “in
a timely and gradual manner” after its first
meeting under the new Governor Hafize
Gaye Erkan, whom President Recep Tayyip
Erdoğan appointed after his election victory
last month.
The bank’s monetary policy committee said
the tightening “will be further strengthened
as much as needed ... until a significant
improvement in the inflation outlook is
achieved.”
Annual inflation eased to below 40% in
May after touching a 24-year high of above
85% in October last year. The central bank
said inflation will come under further
pressure. In his comments, Erdoğan said he
approved the steps Şimşek would undertake
in coordination with the central bank,
suggesting he had given the green light to
rate hikes to combat inflation.
“As stated in the central bank’s
announcement, this is a process,” said
Şimşek. “We will manage this process
gradually and with determination.”
In his remarks after the rate hike, the
minister said predictable economic policies
based on the market economy, a free
exchange rate regime and an inflationtargeting
model would enable capital
inflows and stabilize the Turkish lira.
Price stability and financial stabilityoriented
monetary policy will also support
the implementation of economic policies,
Şimşek said on Twitter.
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