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Turkish central bank Governor Fatih Karahan said on Wednesday that the institution is preparing to recalibrate its monetary policy to ensure the continued decline of inflation, despite the recent slowdown in the pace of improvement.
In an interview conducted by the bank with journalists and an economist, Karahan used a striking analogy, describing inflation as a “virus,” while stressing that the bank is taking “the right policy steps” to address it.
He noted that the pace of disinflation has eased in recent weeks but emphasized that the bank “will do everything in its power” to meet its targets by realigning monetary policy and implementing the necessary measures. He added that current demand conditions in the economy “support the disinflation process.”
Turkey’s annual inflation rate fell in October to 32.87%, slightly better than expected, after two consecutive months of higher-than-forecast readings. On a monthly basis, inflation stood at 2.55%.
In response to price pressures, the central bank has continued to slow its monetary easing cycle, cutting the policy rate by 100 basis points last month to 39.5%.
Karahan said bringing inflation down is “a long-term process,” but preliminary November data indicate, in his words, that the trend “is moving in the right direction.”
“Inflation is like a virus ... the longer it stays in the body, the harder it is to get rid of. But we are taking the right steps and have achieved positive results so far. We have no doubt about our ultimate goal,” he added.
The bank still aims to bring annual inflation down to 16% by the end of next year, within a forecast range of 13% to 19%.
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