CBRT’s road map has been announced: The reserve accumulation strategy will continue in 2024
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Central Bank of the Republic of Turkey Monetary and Exchange Rate Policy Text was published. In the statement made by the CBRT, it was said: “The strategy of accumulating reserves will continue in 2024 as long as market conditions allow.”
Central Bank Monetary and Exchange Rate Policy Text was published. The expressions in the text are as follows:
The biggest contribution of central banks to increasing social welfare is achieved by ensuring price stability. In this context, the main aim of the Central Bank of the Republic of Turkey (CBRT) is to ensure and maintain price stability. The estimates announced in the Inflation Report will be used as an intermediate target to serve as a reference for inflation expectations.
The one-week repo auction interest rate will continue to be the main policy tool of the CBRT.
Quantitative tightening steps will continue by increasing the variety of sterilization tools used.
In order to expand its international sphere of influence, the CBRT will continue its effective communication with international organizations and platforms and its foreign stakeholders such as other central banks. In this context, Investor Days will be organized where technical presentations will be made on subjects such as inflation, monetary policy, financial markets and banking.
The simplification process of the current macroprudential framework will continue in 2024.
In 2024, with the steps to be taken to prioritize Turkish lira deposits, it is aimed to increase the share of Turkish lira deposits in the banking system to 50 percent and to continue the decline in the KKM balance.
The credit composition will be shaped within a framework that takes into account the disinflation process and macroeconomic balances.
In this process, measures may be taken to reduce the impact of tightening financial conditions on low-income segments.
In order to maintain the effectiveness of the monetary transmission mechanism and support monetary tightening, the diversity of sterilization tools used will be increased and the excess liquidity will be sterilized and the quantitative tightening process will continue.
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CMB OMO portfolio size has been determined as nominal 200 billion TL for 2024, without prejudice to the additional purchase option.
Swap transactions will continue in 2024 in order to contribute to banks’ TL and foreign exchange liquidity management. However, it is planned to gradually reduce the amount of swap transactions carried out by the CBRT.
Effective transactions against foreign currency between the CBRT and banks authorized to operate in foreign exchange markets will continue.
In the Foreign Exchange Deposit Market at the CBRT, banks will continue to be provided with one-week and one-month maturity foreign exchange liquidity facilities with a total limit of approximately 50 billion US dollars.
Banks will be able to bring foreign exchange deposits or gold deposits to the CBRT as collateral within the limits granted to them and with various maturities.
International reserves have shown a strong increasing trend since the second half of 2023 with the effects of monetary tightening and simplification steps taken within the macroprudential framework and reached 145.5 billion USD as of December 22, 2023. In this regard, the strategy of accumulating reserves will continue in 2024 as long as market conditions allow, and the continuation of the steady increase trend in international reserves will be ensured.
In 2024, additional facilitating steps may be taken in export and foreign exchange earning services rediscount loans in order to improve the financing conditions of exporting companies and support their access to finance.
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