In his statement, Kaan noted the following:
The easing of the loss of momentum in the real sector in the Turkish economy has also been reflected positively in consumer prices for the month of August. Indeed, in this period increases were recorded in the manufacturing industry capacity utilization and real sector confidence indices announced by the Central Bank of the Republic of Türkiye, and visible recoveries also occurred in the PMI announced by İSO and in the MÜSİAD Purchasing Managers' Index. In this context, the decline in the annual increase in consumer prices to the level of %15.01 presents a positive picture for the third quarter of the year.
The increases observed in production costs because of the speculative currency attack to which our country was exposed in August of the previous year had been the main determinant of the fluctuations in consumer prices. When we come to 2019, however, it is striking that considerable stability was achieved in the exchange rate, particularly in the period covering the months of June, July and August. Thus, in the one-year span from the currency attacks until today, the Turkish economy has got back on track and has succeeded in rapidly entering a rebalancing process.
The 425 basis point interest rate cut decision taken by the Central Bank of the Republic of Türkiye in July, and the fact that it was rapidly reflected in market interest rates, has also been a highly positive development for the inflation rate in terms of its effects on the revival of domestic demand. In this context, we estimate that the headline inflation pulled down to the level of %15.01 is consistent with the Central Bank's monetary policies, that interest rate cuts will continue in the coming period as well, and that their positive reflections on the real sector, and therefore on both producer and consumer prices, will continue.
While we welcome the decline observed in interest rates, we believe that we must carefully address the increases observed in credit risk premiums. Indeed, as MÜSİAD we frequently state that we need to make the transition to a “production-oriented” economic model, and we are making an intense effort to establish a satisfying balance on the production and investment line. And for this, we must by all means keep the interest burden on the back of production at the minimum possible level.