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New central bank governor hints interest rate cuts in first public remarks: report

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Turkey’s new central bank governor hinted at rate cuts in his first remarks since taking office nine days ago, emphasizing that the bank had “room for maneuver” in its monetary policy, Reuters reported, citing the state-run Anadolu news agency.

“Needless to say, to achieve an ever-improving inflation outlook it is crucial to maintain a cautious monetary policy,” Murat Uysal, who was appointed governor after President Recep Tayyip Erdoğan ousted his predecessor, told Anadolu.

“But the level of tightness here can be best described through real rates rather than nominal rates.”

Economists expect the bank to cut its benchmark rate by 200 basis points from 24 percent at its next rate-setting meeting on July 25, after inflation fell in June to a year-low of 15.72 percent.

Turkey’s benchmark interest rate was hiked to 24 percent last September to stem a sharp fall in the lira. The central bank has left it unchanged since then, as the economy tumbled into recession, to prevent renewed losses in the currency.

Uysal told Anadolu that the bank had sufficient room for a cut in interest rates as he expected disinflation to continue in 2019 on the back of declining cost pressures and weaker domestic demand.

On Sunday Erdoğan said Turkey would make serious cuts to interest rates and that it aimed to reduce inflation to single digits by the end of the year, broadcaster Habertürk reported.

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