Cetinkaya’s first performance: Hail the new boss, same as the old boss

TURKEY - In Brief 26 Apr 2016 by Atilla Yesilada

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Cetinkaya’s first performance: Hail the new boss, same as the old boss With our economist, Dr Murat abroad with business, the task of evaluating the first public performance of new CBRT chairman Mr. Cetinkaya has fallen upon me, the Political Analyst. The lines below are my personal impressions, which Dr Murat Ucer will correct and expand upon as he sees fit when he returns to his desk. CBRT kept its 2016-2018 inflation forecasts at 7.5%, 6% and 5% respectively, counting on somewhat higher oil and somewhat lower unprocessed food prices. As long as global volatility remains low, the process of “monetary policy simplification”, currently characterized by lowering the O/N lending rate will continue. However, the liquidity policy as measured by the blended daily funding rate in OMO will be kept tight as long as inflation deviates from medium-term targets. CBRT believes it has ample tools and maneuvering room to combat currency volatility, if the global backdrop deteriorates despite lower O/N lending rates in the future. Moreover a strong fiscal stance and help from macro-prudential oversight will also help reduce systemic risk of external shocks were to occur. Cetinkaya’s presidential agenda is · to explore and fight the structural dimensions of inflation · to establish better dialogue with all stakeholders · and to switch to a more transparent and simple monetary policy framework as soon as possible. Regarding the economic environment, CBRT forecasts faster domestic demand growth vis-à-vis 2015 and moderate improvement in external demand, hence it can be said to approve the 4.5% GDP growth target of the administration, though I have not read the Inflation Report yet. The ...