The bank’s inflation target was very precise, Central Bank Governor Durmus Yilmaz said during a meeting on monetary policy in the central Turkish city of Kayseri.
Thursday the bank targeted a four percent inflation rate for 2008 and the following “We do decide the inflation target together with the government but the decision on how to chose the means to reach that target is completely under the bank’s authority and responsibility,” he said.
“We cannot make any concessions on price stability. We need to further reduce the figure because if we get to stop at this moment, inflation can climb even higher.”
However, Yilmaz warned that there were signals that recent fluctuations in the global financial markets had started to affect real sector in Turkey, with the flow on from the recent credit crisis potentially heralding a slowdown in growth.
“The problem we had to deal with until now was liquidity but from now on we will have to deal with the problem of bankruptcy,” he said. “If the loans are not going to be repaid, it means that interest rates are losing their functions.”
A report issued by the Central Bank on Thursday showed that Turkey’s current account deficit rose by 28 percent in January compared to the same month last year, hitting $3.934 billion.
The 44.1 percent increase in the foreign trade deficit was the main reason for the steep rise, the banks said.
