Turkey launches tighter monetary policy

Baku. 1 February. REPORT.AZ/ Central Bank of Turkey (CBT) sent "open letter" to government due to the projected increase in inflation from 5% to 8.53% in 2016.

Report informs citing the Habertürk, in a letter sent to the Deputy Prime Minister Mehmet Şimşek, CBT

mentioned that the main objective is the price stability and bank will use all the instruments. For the regulation of inflation, additional monetary tightening may be implemented by Central Bank.To this end, the bank plans to take liquidity measures against sharp movements in the foreign exchange market.

Analytical Group of Report News Agency believes that Central Bank's objectives coincide with the decisions of the central bank of most developing countries. Thus, developing countries plan to tighten monetary policy in order to prevent the devaluation.This will raise interest rates or liquidity, that is performed by reducing the money supply. Central Bank's decision associated with reduction of liquidity. Turkey shows that it is against an increase in interest rates in any case.However, there will be a shortage of money as a result of the reduction of liquidity and that will lead to an increase in interest paid on the money.This will prevent the economic growth of Turkey in 2017.

Notably, Azerbaijan acts in a similar way. Central Bank of Azerbaijanincreases sterilization in order to cut budget expenses and thereby plans to avoid extreme depreciation of the national currency: "Of course, it will prevent devaluation of the manat. However, it does not seem possible to achieve economic growth this year. The process of rapid GDP growth in last 15 years, and the price will stabilize this year and more robust economic growth will be achieved in 2018.