Eskisehir: The Turkish Central Bank aims to reduce inflation to 21% by the end of the year, the governor of the bank said on Thursday. Fatih Karahan, speaking at an event in the central province of Eskisehir, highlighted the bank's strategies and measures to achieve this target.

According to Anadolu Agency, Karahan emphasized that the decline in the risk premium has led to a decrease in the foreign interest burden by $7 billion annually. He attributed the reduction in the underlying trend of monthly inflation to a decisive stance in monetary policy, which has been instrumental in strengthening the disinflation process. This has been facilitated by a rebalancing in domestic demand, a real appreciation in the Turkish lira, and improved inflation expectations. Additionally, the governor noted that increased coordination of fiscal policy will play a crucial role in supporting these efforts.

Karahan further explained that the measures taken in the initial phase were successful in preventing inflation from reaching higher levels. He assured that the tight monetary policy stance will continue until there is a significant and permanent decline in the underlying trend of monthly inflation. The convergence of inflation expectations to the projected forecast range is also a critical factor in this approach.

To achieve the envisaged disinflation process, Karahan stated that the policy rate will be set to maintain the necessary tightness, considering both inflation realizations and expectations. He also mentioned that the Monetary Policy Committee will adopt an inflation outlook-oriented, cautious, and meeting-based approach in its decision-making process. Currently, Turkey's annual inflation rate stands at 44.38% as of December, with the central bank's policy interest rate at 47.5%.