and the european central bank in recent periods, uncertainty about interest rates has increased globally, leading to capital outflows from emerging markets. nevertheless, reinforced macroeconomic fundamentals, tight monetary and fiscal polices, the shock - absorbing function of the floating exchange rate regime, the reduced ratio of short - term foreign credits to international reserves and disciplined implementation of the current economic program minimize the adverse effects of outflows on the turkish economy. the rapid rise in the consumption tendency despite the relatively low increase in disposable income increases the indebtedness of households. therefore, close monitoring of likely risks for the household that may arise from the increasing demand for housing loans, which is still low compared to other countries, is of great importance. indeed, as seen in ( other ) country experiences, asset prices can rise rapidly in periods of expansion to be followed by slumps in housing prices, which would simultaneously push down the value of the collateral for the financial sector and decrease household wealth. therefore, these are important risk factors that should seriously be taken into account. dear guests, i would like to draw your attention to credit cards regarding the household indebtedness issue. as it is known, in general, the credit card is a payment instrument that enables its owner to purchase goods and services at member businesses without using cash. moreover, if credit card users wish to withdraw cash or to delay their credit card payments for a determined period, the relevant amounts spent turn into credit and thus the credit card becomes a credit instrument. institutions issuing credit cards incur pos ( point of sale ) machine investment and membership to national and international payment systems expenditures, and they are exposed to liquidity risk due to unforeseen cash withdrawals. consequently, banks tend to determine higher credit card interest rates than those of consumer credits due to their higher risk exposures, namely the higher credit risk because of weak collateral structure and liquidity risk because of unforeseen cash withdrawals. a survey of country practices also reveals that credit card interest rates are determined higher than interest rates set for consumer credits. therefore, it is in the interest of credit card users to meet their short - term credit needs via consumer credits rather than their credit cards. moreover, the interest rates applicable to credit card transactions differ significantly from bank to bank. the tendency of customers towards credit cards of banks with lower interest rates will enhance competition in the banking sector and the interest rates applicable to credit cards will be pushed down. the highest interest

. ahead of the june mpc meeting, we determined two important agenda items to strengthen the effectiveness of monetary policy. the first one is to reduce the spread between market rates and the policy rate. before our first mpc decision in june, the average deposit rate was above 40 % while the policy rate was 8. 5 %. as part of the june mpc decision, in addition to the rate hike, we took the first step for the simplification of the macroprudential framework in deposits, via the securities maintenance practice. 6 / 11 bis - central bankers'speeches shortly following these steps, the interest rate on deposits with a maturity of up to three months decreased by approximately 12 points to 30 %. we started the process with deposits because they are the most binding constraint of the banking sector and adversely affect the functionality of markets as well as price behavior. thus, the simplification process in the macroprudential framework, in addition to the rate hike, has increased the effectiveness of the policy rate in a balanced manner. our second agenda item is to rein in the inflationary effects of the acceleration in retail loans. in the first six months of 2023, retail loans rose at rates exceeding 70 % in credit cards and 68 % in vehicle loans. in total, retail loans increased by 40 %, exceeding 2 trillion turkish liras. the growth rates in the first and second quarters of this year are more than three times higher than the last ten - year average. credit expansion fuels domestic demand, deteriorates expectations, and increases imports and the current account deficit. with our july mpc meeting decisions on the rate hike as well as on selective credit tightening as part of monetary tightening, we contain the effects of credit expansion on inflation. in addition to credits, we also sterilize liquidity through quantitative tightening, thereby enhancing the effect of rate hikes. to sum up, in our monetary tightening process, we are making the gradual and steady rate hikes more holistic and stronger through quantitative tightening and selective credit tightening. with the decisions we took at the june and july mpc meetings, we have raised the policy rate by a total of 900 basis points, from 8. 5 % to 17. 5 %. thus, the policy rate has more than doubled in two months. with our decision to simplify the securities practice, deposit rates have declined while our policy rate has increased. deposit rates have come to levels more aligned with inflation expectations. however, we also