The summary of the meeting of the Monetary Policy Committee on April 27 was published.
In the summary, it was stated that while consumer prices increased by 2.29 percent in March, annual inflation decreased by 4.67 points to 50.51 percent. In the summary, it was noted that annual inflation decreased in all groups, most notably in the energy group.
In the summary, it was emphasized that producer prices showed a limited increase due to the continued significant decline in energy prices, and the downward trend in annual producer inflation was maintained in March.
Despite the fact that the recently announced data on economic activity has been more positive than expected, it was noted that the recession concerns in the economies of developed countries continue due to the effect of geopolitical risks and interest rate hikes.
Although the negative effects of supply constraints in some sectors, especially in basic food, have been reduced thanks to the strategic solution tools developed by Turkey, it is stated that high levels of producer and consumer inflation on an international scale are maintained. transferred.
In the summary, “Although the divergence in the monetary policy steps and communications of the central banks of developed countries continues due to the differing economic outlook between countries, the financial markets, where coordinated steps are taken that prioritize financial stability with swap agreements and new liquidity opportunities, reflect the expectations that central banks will end their interest rate hike cycles soon. ” statements were included.
In the summary, it was emphasized that inflows to both borrowing and stock markets were observed in parallel with the improvement in the global risk appetite in portfolio flows to developing countries. said to be alive.
While international commodity prices declined in March, it was noted that this development spread across sub-groups, and the following statements were included in the summary:
“Global food prices continued to decline, led by grains and oils. While crude oil prices decreased in March, price increases were realized in early April following the quota restriction decision agreed by OPEC countries, but prices returned to pre-decision levels at the end of the month. The downward trend in international natural gas prices continued in April, albeit at a slower pace. Parallel to this outlook, domestic natural gas industry tariffs were also reduced in April. While the indicator regarding the pressures in the global supply chain remained below its historical trend in March, it was observed that the problems experienced in the country after the earthquake were largely resolved by March. The positive outlook in international transportation costs was maintained in March. Under this outlook, under the leadership of the energy group, producer prices rose by 0.44 percent, and the downward trend in annual producer inflation continued.
“Improvements began to be seen in the level and trend of inflation”
With the support of the holistic policies implemented, improvements in the level and trend of inflation started to be seen, but the effects of supply-demand imbalances caused by the earthquake on inflation were closely monitored.
“The leading indicators before the disaster of the century indicated that domestic demand was more vibrant than external demand in the first quarter of 2023 and that the growth trend increased. Seasonally and calendar adjusted industrial production index decreased by 6 percent on a monthly basis in February due to the earthquake after the increase in January. In January- On the other hand, industrial production decreased by 0.4 percent on a quarterly basis in February, while seasonal and calendar adjusted retail sales volume index decreased on a monthly basis in February following the strong increase in January, but increased by 5.1 percent on a quarterly basis in the January-February period. Indicators and survey data indicate that production and consumption, which declined in February due to the effects of disaster, showed a strong recovery trend in March, and that domestic demand was more effective than external demand in this development.The effects of the earthquake on production, consumption, employment and expectations are comprehensively evaluated. Although the earthquake is expected to affect the economic activity in the near term, it is anticipated that it will not have a permanent effect on the performance of the Turkish economy in the medium term.
In the summary, it was stated that the leading indicators showed that the economic activity in the earthquake region was recovering faster than expected.
While card expenditures continued to recover towards their pre-earthquake levels as of the end of March in the provinces that were more severely affected by the disaster, in the summary it was reported that it rose above pre-earthquake levels in other provinces in the disaster area, similarly, seasonally adjusted, exports from the disaster area decreased in March after the decline in February. It is said to be close to its previous level.
In the summary, when the data of the Business Tendency Survey (BTS) are analyzed on a provincial basis, it is stated that the production and demand expectations increased in March in the provinces with high economic weight in the disaster area.
In the summary, it is stated that the detailed information obtained from the field interviews confirms that the recovery trend in the disaster area continues strongly, “The impact of the earthquake on the disaster area labor market will be evaluated more clearly in the coming months. Along with the data flow on employment, survey indicators and high-frequency data are closely monitored. Employment Data on job prospects, job postings and job applications show that the upward trend in employment throughout the country is maintained, despite the limited deceleration after the disaster, with the strong recovery that followed. it was said.
It is important for price stability that the current account balance becomes permanent at sustainable levels.
In the summary, it was noted that while the share of sustainable components in the composition of growth remained high, the strong contribution of tourism to the current account balance, which exceeded expectations, continued throughout the year.
In addition, it was emphasized that the domestic consumption demand, high level of energy prices and weak economic activity in the main export markets kept the risks on the current account alive.
In the summary, it was stated that a slowdown trend has been observed in gold imports in recent weeks, and it was stated that it is important for price stability that the current account balance becomes permanent at sustainable levels.
In the summary, it is stated that the monetary policy stance will be determined with a cautious approach, focusing on achieving the sustainable price stability target, taking into account the source and permanence of the risks to the inflation outlook and the extent to which they can be controlled by monetary policy. It was emphasized that a liraization-oriented approach will continue to be exhibited.
In the summary, it was noted that the growth rate of loans and the meeting of the financing resources reached with economic activity in accordance with its purpose were closely followed.
In the summary, which stated that the Board will prioritize the creation of appropriate financial conditions in order to minimize the effects of the disaster and support the necessary transformation, the summary said, “Supporting financial conditions in terms of sustaining the acceleration in industrial production and the increasing trend in employment became even more important after the earthquake. In this context, the Board decided that the policy rate “The Committee is of the opinion that the monetary policy stance is sufficient to support the necessary recovery after the earthquake by maintaining price stability and financial stability. The effects of the earthquake in the first half of 2023 will be closely monitored.” statements were included.
In the summary, it was stated that the CBRT will implement the Liraization Strategy with all its elements in order to institutionalize price stability in a permanent and sustainable way.
As stated in the 2023 Monetary Policy and Liraization Strategy of the Board, it is stated that it will continue to use the tools that will support the efficiency of the monetary transmission mechanism with determination and will align the entire policy toolkit, especially the funding channels, with the liraization targets.
In this process, the focus is on developing policy instruments to support the development of Turkish lira deposits, to increase the Turkish lira-denominated assets in the collateral structure of Open Market Operations funding, to reduce the weight of currency swaps in the composition of funding, and to strengthen foreign exchange reserves.
In the summary, it was stated that the demand for long-term, fixed-income and Turkish lira assets increased, and the course of the yield curve in the direction of the efficiency of monetary transmission was closely monitored.
In the summary, it was stated that the Board will monitor the development of the financing costs of the loans, which provide efficiency gains in targeted areas, together with the growth rate of loans, in a way that will ensure the protection of the transfer.
In this context, the effects of developments in Turkish lira liquidity and distribution on deposit and loan pricing, the effects of developments in exchange rates on inflation, the effects of developments on currency-protected deposit products on reverse currency substitution, the depth and stability of foreign exchange markets and price stability are analyzed and the necessary policy measures continue to be developed. In line with its main objective of price stability, the CBRT will resolutely continue to use all the tools at its disposal until strong indicators pointing to a permanent decline in inflation emerge and the medium-term 5 percent target is reached. The stability to be achieved in the general level of prices will positively affect macroeconomic stability and financial stability through the decrease in country risk premiums, the continuation of reverse currency substitution and the upward trend in foreign exchange reserves, and the permanent decline in financing costs. Thus, a suitable ground will be created for the continuation of investment, production and employment growth in a healthy and sustainable way. The Board supports the creation of a holistic macro policy mix that includes all stakeholders, with strong policy coordination, to ensure price stability. The Board will continue to take its decisions in a transparent, predictable and data-oriented framework.
