Finance Minister Elvan says fight against inflation is at center of all Turkey’s policies
Turkey will never deviate from its inflation target for the sake of short-term gains, the country’s finance minister said on Friday.
“The fight against inflation is at the center of all our policies,” Lutfi Elvan said at a meeting with businessmen in the northwestern province Bursa.
“What matters to us is the sustainability and inclusiveness of growth,” he noted, adding, inflation is the main obstacle to this.
In an environment of high inflation, industrialists cannot see their way forward or make sound decisions, nor dare to make long-term investments, he underlined.
“We address this issue as a whole. Our monetary, fiscal, financial sector and structural policies act in harmony.”
Exchange rate impact on inflation on rise
Pointing out that exchange rate stability is also vital, Elvan said: “Recently, we see that the effect of exchange rate pass-through on inflation has increased.”
“With the stabilization of the exchange rate and the decrease in inflation, our country’s risk premium will also decrease, capital inflows will accelerate, demand for Turkish-lira assets will rise, and the environment of confidence will bring stable growth.”
He underlined that Turkey had successfully faced down high inflation in the past, reducing it to the single digits, adding that Turkey would “write a similar success story” this time.
Turkey’s Central Bank on Thursday kept its one-week repo rate also known as the policy rate steady at 19%, for a third month after raising it by 200 basis points in March.
The bank said in a statement that “high levels of inflation expectations continue to pose risks to the pricing behavior and inflation outlook.”
In its April report, the bank raised the country’s year-end inflation forecast for this year to 12.2%, up from 9.4% in its previous report.
Turkey’s annual inflation rate stands at 16.59% in May, down from 17.14% in April, according to the latest data from the Turkish Statistical Institute (TurkStat).