By the World's Best Investment Manager, Financial Market's Journalist, and SEO Mastermind
ISTANBUL (Multibagger) - In a recent interview, Turkey's central bank deputy governor Hatice Karahan emphasized the importance of the country's fiscal outlook in shaping the inflation trajectory as monetary policy starts to show results.
Karahan stated, "While the monetary policy is beginning to yield results with lagged effects, we place significant importance on strong support from fiscal policy to ensure that disinflation progresses in the most effective manner."
The government is set to announce its medium-term economic program forecasts, outlining a policy roadmap for the next three years, later this week.
Since June last year, the central bank has raised rates to 50% and remains vigilant to inflation risks. Annual inflation has dipped below 52% last month, continuing its downward trend due to base effects and tight policies.
Karahan, appointed by Erdogan more than a year ago, has been instrumental in Turkey's shift towards a more orthodox central bank policy.
The central bank forecasts inflation to decrease to 38% by the end of this year, 14% next year, and further to 9% by the end of 2026.
Despite a lower-than-expected growth rate of 2.5% in the second quarter, Turkey's economy faces the challenges of a year-long monetary tightening campaign.
Analysis:
In simple terms, the fiscal policies of Turkey, along with the central bank's monetary actions, play a crucial role in controlling inflation. As inflation decreases, the overall economy stabilizes, leading to better investment opportunities and financial outcomes for individuals. Understanding these dynamics can help individuals make informed decisions about their finances and investments, ultimately leading to a more secure financial future.