Central Bank keeps 5 percent medium-term inflation target

The Central Bank has said that under the inflation targeting regime, the medium-term inflation target of 5 percent set jointly with the government has been maintained.

The monetary policy will be formulated to bring inflation to the medium-term target gradually, it said in the monetary policy and liraization strategy for 2023, adding that to achieve and maintain price stability, all available instruments will continue to be used.

It noted that its main policy instrument is the one-week repo auction rate.

In 2022, the Central Bank reduced the policy rate from 13 percent in September to 9 percent in November, while kept it at this level at the Monetary Policy Committee's (MPC) final meeting on Dec. 22.

In 2023, the MPC will hold 12 meetings on a preannounced timetable and the main communication tools of the monetary policy will be the MPC announcements and the Inflation Report.

"Policies to be implemented under the Liraization Strategy will continue to be used in a strengthened manner to permanently increase the weight of the Turkish Lira in both assets and liabilities of the banking system," the bank said in the strategy document.

The liraization target in deposits is set at 60 percent for the first half of 2023 and conditions for banks' use of funding, collateral and credit channels will be calibrated in line with the liraization targets, it added.

Activities that increase investments, employment, production, exports and current account surplus will be supported by targeted loan policies in a manner consistent with the inflation path envisaged for 2023, according to the bank.

The floating exchange rate regime will continue, and exchange rates will be determined under free market conditions according to supply...