Central Bank: The first objective is to stabilise inflation around 5.0 percent

Mahmut Can Emir / Istanbul, Dec

05 Aralık 2018 20:39

Mahmut Can Emir / Istanbul, Dec. 5 (DHA) – The Central Bank announced that the prime objective of the bank is to achive price stability and reducing and stabilizing inflation around 5.0 percent in its “Monetary and Exchange Rate Policy 2019” report.
Following statements were made by the Central Bank;
“The primary objective of the CBRT is to achieve price stability. Monetary policy decisions are based on inflation expectations, pricing behavior and other factors affecting inflation. The CBRT will continue to safeguard financial stability as a supporting element of price stability.
“The inflation target has been kept at 5 percent as per the agreement reached with the government. Monetary policy will be set so as to bring inflation to the target gradually. The updated forecasts in the CBRT’s Inflation Reports will serve as reference for the disinflation process while inflation converges to the target over the medium term. Along this disinflation path, the first objective is to bring down inflation to single digits, and then gradually reduce inflation further to stabilize it around 5.0 percent.
“The uncertainty band around the inflation target has been kept at 2 percentage points in both directions, as in previous years. The CBRT will make detailed evaluations on inflation developments in the Inflation Reports throughout the year. As an element of accountability, an \"Open Letter\" will be submitted to the government if inflation falls outside the uncertainty band at the end of the year.
The Central Bank statement emphasised that floating rate will continue to be implemented and added;
“Under the current regime, the foreign exchange (FX) supply and demand are mainly determined by economic fundamentals, the monetary and fiscal policies implemented, international developments and expectations. The CBRT has no nominal or real exchange rate target. Nevertheless, if the exchange rates are at odds with economic fundamentals or excessive volatility poses risk to financial stability, the CBRT will not remain indifferent to these developments. If the exchange rate movements permanently affect price stability, the CBRT will change its monetary policy stance and give the necessary reaction. The CBRT will continue to closely monitor exchange rate developments and any risk factors related to it and will take necessary measures and use the relevant instruments in order to make sure that the FX market operates efficiently.\"

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