Türkiye further eased regulations forcing banks to buy government bonds and reduced a security maintenance ratio again in its latest steps to end punitive measures on lenders.
The monetary authority scrapped forced government bond-buying of Turkish lenders related to targets on credit growth, according to a statement early Saturday.
Bloomberg reported that the securities maintenance ratio applied to liabilities was cut to 1% from 4%.
“The central bank continues to simplify macroprudential measures in order to retain functionality of market mechanism and macro-financial stability,” according to the statement.
It's one of the biggest steps yet by the central bank in ending fringe measures adopted earlier when raising rates were not an option.
The forced bond purchases were part of a patchwork of rules introduced by previous leaderships, which complied with President Recep Tayyip Erdogan's preferences for ultra-low interest rates and then introduced dozens of new regulations to compensate for the consequent market disruptions.
The Turkish central bank's new Governor, Fatih Karahan, earlier said the bank will keep monetary tightening policies till it reaches the inflation target. “We will not allow any deterioration in the inflation outlook,” he said.
Speaking one day following his nomination as governor after Hafize Gaye Erkan, Karahan said that price stability was “the priority” for the central bank.
“We will continue our efforts to bring down inflation to the path we have predicted, maintaining our policy stance until we achieve lasting price stability in the medium term,” he said, while January's unannounced numbers forecast a new spike in inflation.
“We closely monitor inflation expectations and pricing behaviors. We will absolutely not allow any deterioration in the inflation outlook,” the CB governor added.
