Ankara:Trkiye's investment fund market remains stable and sound, despite ongoing investigations and the liquidation of some funds, stated the Central Bank governor. No issues are affecting the broader financial system, according to his address.

According to Anadolu Agency, the Central Bank governor, Fatih Karahan, informed lawmakers at the parliament's Planning and Budget Committee that the volatility is confined to individual funds within a limited segment of the financial markets. He emphasized that the overall fund market is functioning well and that the financial system remains unaffected.

To manage potential spillovers, the Central Bank has increased repo auction amounts, raised banks' borrowing limits tenfold, relaxed collateral requirements, and expedited bond purchases. Karahan assured that necessary actions will continue based on market conditions.

Since August 28, there have been significant fund withdrawals, partially redirected into bank deposits, with commercial and savings deposits increasing by over 800 billion Turkish liras ($16.3 billion). Despite these withdrawals, the Turkish lira's share, including investment funds, has remained stable around 61%-61.4%, and recent data shows a slowdown in fund outflows.

Karahan noted that three investment banks, whose shareholder rights were transferred to the Savings Deposit Insurance Fund, constitute only 0.2% of the banking sector. He stated that no systemic risk is currently anticipated.

Inflation in Trkiye has decreased from 75% to the 30% range, indicating progress, although the target level has not yet been achieved. Persistent issues such as rent and education inflation, slow monetary policy transmission, and food and energy supply shocks necessitate maintaining high-interest rates for an extended period. Karahan acknowledged the associated costs for workers, businesses, and public finances but stressed that achieving low and predictable inflation is crucial for a lasting solution to current challenges.