fatih karahan : recent economic and financial developments in turkey speech by ms fatih karahan, governor of the central bank of the republic of turkey, at the briefing on the inflation report 2024 - iii, ankara, 8 august 2024. * * * distinguished members of the press, esteemed participants, welcome to the briefing to convey the main messages from the third inflation report for 2024. i would like to extend my respect and greetings to all of you. as you know, the disinflation process has started as we had envisaged. macroeconomic indicators are in line with this process. as a result of our tight monetary policy stance, the slowdown in credit growth has recently become more evident. domestic demand has been declining since the second quarter. we envisage that the rebalancing in demand will continue and further strengthen. thanks to this rebalancing, current account deficit continues to decline. the only factor that has not changed since the previous report is our decisive monetary policy stance. in the upcoming period, we will maintain this stance and act in a way to make sure that disinflation continues. in the following parts of my speech, i will give you detailed information about these topics. i will start my presentation by sharing our assessment regarding the macroeconomic outlook and our monetary policy stance. later on, i will present you our medium - term projections. after my presentation, our deputy governors and i will be answering your questions. our inflation reports include boxes on the prominent issues on the agenda as well as thematic analyses. in this report, we discussed topics such as sterilization tools, determinants of inflation expectations as well as relation of credits with exports and inflation expectations. i would like to draw your attention to these boxes. esteemed guests, i would like to start my speech with the recent key global economic developments. the limited recovery in global growth continues, led by the services sector. growth forecasts have been revised slightly upwards in the euro area and downwards in the middle east and africa. thus, turkiye's foreign demand outlook remained flat 1 / 10 bis - central bankers'speeches compared to the previous reporting period. a more pronounced recovery is expected in 2025. the global growth outlook, geopolitical risks and supply - side factors continue to affect commodity prices. while non - energy commodity prices have been moderate recently, oil prices remained volatile. the decline in global headline and core inflation continues. the normal

to the unexpectedly big wave of capital flows to many emerging market economies. regardless of the form or way of these inflows, they create important challenges for policymakers due to their potential to cause overheating of economies. emerging market countries have responded to address these concerns in a variety of ways, such as exchange rate alignments, efforts to neutralize the monetary impact of interventions through sterilization, and controls on capital flows. at this point, i should note that coordinated fiscal and monetary policies are necessary to attract high quality capital flows and to manage flows efficiently regardless of their type. low inflation and prudent fiscal polices signal to investors the extent of government ’ s commitment to achieve macroeconomic stability and adds to the credibility of the government. on the other hand, efforts in the field of financial supervision and regulation, together with policies such as labor and product market reforms are important for the stability and soundness of financial systems in handling capital inflows. regulatory and supervisory authorities should strengthen prudential and other financial market regulations in order to deepen financial markets and improve investment climate, whereas central banks should focus more on greater currency flexibility and price stability. in conclusion, as a central banker, i would like to highlight three key messages from the thoughts i have shared with you. first, to achieve price stability, central banks need to ensure efficiency of financial infrastructure and maintain smooth operation of financial services. an efficient and effective payment and settlement system is at the core of financial infrastructure. second, removing market imperfections is essential for the smooth operation of financial systems. establishment of credit bureaus to improve exchange of information on credit history of economic agents and reducing fiscal dominance are important steps to ensure sound - lending activities. in this context, the role of micro finance in promoting the access of the low - income segment of the society to credit should be supported and encouraged. third, the overall level of external financing and its composition is important for domestic access to finance. the benefits of capital inflows to economic growth would be higher with a developed financial sector. central banks could best support this process through their contribution to macroeconomic stability. thank you.