The Central Bank of the Republic of Turkey (CBRT) appears committed to a tighter monetary policy for the coming years to battle inflation. But the risk of President Recep Tayyip Erdogan reverting to pressuring the bank back into an easing remains high, which would undermine confidence in CBRT while increasing the Turkish economy’s exposure to external global economic shocks. Through statements issued Jan. 21, Turkey’s central bank is indicating it wants to hold a tight monetary policy until 2023 if necessary, as Turkey struggles to reach its 5% inflation target. The CBRT also said that 10% consumer price inflation was possible in 2021 as the COVID-19 pandemic eased and higher interest rates helped control inflation by depressing credit demand, signaling that the bank no longer sees its 5% inflation goal as achievable this year. ...
