Basci: Award shouldn't be exaggerated

Having been chosen as Central Bank Governor of the Year 2013, Erdem Basci said that the award should not be exaggerated and that he would accept the greetings only when we achieve our objectives. Turkey Central Bank Governor Erdem Basci announced the first inflation report of the year in a press conference. Focusing on the global and Turkish economic progress in the first part of his speech, Basci underlined that the increase in the risk appetite during the last quarter of 2012 has become more evident. "Last year, medium-term inflation expectations have started to prominently pull round for the first time; export and import have positively contributed to the economic growth. We will continue to keep the interest rates low and to take macro-prudential measures in order to stabilize the financial risks. As for monetary policies, we will hold our prudent and flexible stance. Low real interest rates are historically keeping the balance. Loan growth has witnessed acceleration in the last quarter and has grown by 16%. There is a risk of rapid loan growth during the upcoming quarter." Basci added. Stating that the projections were based on stronger domestic demand outlook for the first half of 2013, Basci said, "The external demand remains low. We predict that total demand provision will less contribute to the inflation in the first quarter of 2013. We have limitedly increased oil price presumptions. We preserve the rise in food prices as 7%." Saying they have also taken the adjustments in tobacco prices into consideration while estimating the inflation, Basci stated that they foresee no supplementary tax apart from the regular tax increase every six months. Basci also criticized the credit rating agencies, saying they have been the topic of excessive discussion and that the agencies have been gradually losing their importance. "The number of analysts has increased and the ratings are not as important as they were in the past. The position of the Central Bank does not depend on the credit rating agencies and nor should other stakeholders in the market do," Basci added. Basci concluded that the biggest risk in 2013 stemmed from the risk of economic policies to be chosen and this was generally the case seen in the developed countries. Basci also said that they predicted the inflation rate for 2013 to be between 3.9-6.7 percent with 5.3 percent midpoint.