CBRT: Tight Financial Conditions Contribute to the Balancing of Domestic Demand While Disinflation Continues

The Central Bank of the Republic of Turkey (CBRT) noted that while tight financial conditions contribute to the balancing process of domestic demand, the disinflation process continues. In the "Financial Stability Report," the CBRT stated, "The tight monetary policy stance and the macroprudential framework are effective in ensuring that credit growth follows a moderate path that balances domestic demand." Key highlights from the report include:

"The surplus of TL liquidity in the system is effectively managed through reserve requirements, repo transactions, and other sterilization tools. The decline in country risk premium and the upgrades by credit rating agencies have led to a marked improvement in external financing conditions for all sectors. The low indebtedness of the real sector limits the impact of tightening financial conditions on firm balance sheets and banking asset quality. While the low level of household indebtedness is maintained, the share of individual credit cards and overdraft accounts in the debt composition has increased. There has been a slight increase in the TGA rates for individual credit cards and consumer loans, and the restructuring options implemented for these debts are expected to contribute to risk management. Despite the decline in profitability indicators within the banking sector, intrinsic capital generation remains at a supportive level for capital adequacy."