TCMB announced the 2023 framework for monetary policy

The Central Bank of the Republic of Turkey has published its 2023 monetary and exchange rate policy text. The Central Bank of the Republic of Turkey (TCMB) has published the text that sets out the basic framework of the monetary and exchange rate policy for the coming year. The following statements were used in the text regarding the basic framework: The main objective of the Central Bank of the Republic of Turkey (TCMB) is to achieve and maintain price stability. For this purpose, all available tools will continue to be used. Financial stability will be observed as a factor supporting permanent price stability. The integrated policy framework of the TCMB, the Liraization Strategy, will be strengthened and continued to be implemented. Within the framework of the inflation targeting regime, the medium-term inflation target determined together with the Government has been maintained at 5 percent. Using the estimates announced in the Inflation Report as an interim target, monetary policy will be established in a way that will gradually bring inflation closer to the medium-term target. The main policy tool of the TCMB is the one-week repo auction interest rate. Policies supporting the effectiveness of the monetary transmission mechanism will be maintained by ensuring that market interest rates are consistent with policy interest rates. The policies to be implemented within the framework of the Liraization Strategy will continue to be strengthened and used in order to permanently increase the weight of the Turkish Lira (TL) on both the asset and liability side of the banking system. In this context, the liraization target in deposits has been determined as 60 percent for the first half of 2023. Banks' funding, collateral and credit channel usage opportunities will be calibrated in line with the liraization targets. The share of funding made through Open Market Operations (OMO) in TL liquidity management will be gradually increased and OMO will be made the main element of funding. Activities that increase investment, employment, production, export and current surplus will be supported by targeted credit policies in line with the inflation path projected in 2023. The floating exchange rate regime will be maintained and exchange rates will be formed according to the supply and demand balance under free market conditions. Strengthening foreign exchange reserves is important in terms of the effectiveness of monetary policy and financial stability. In this direction, diversification of reserve sources and increase of reserves will continue. The first payments on the Digital Turkish Lira Network have been successfully made. The Digital Turkish Lira Collaboration Platform will be expanded with the participation of selected banks and financial technology companies in 2023 and advanced phases will be carried out with pilot tests with broad participation.