Reuters: Central Bank can take deterrent steps in consumer loans

Investors participating in the investor meetings of the Central Bank said that the measure that could be taken could be the deterrent of the consumer loans through the required reserve. Investors also got the impression that measures could be taken in the loan composition in order to protect imports, current account deficit and inflation.

At the three CBRT investor meetings, where Reuters consulted, the monetary policy and inflation views were “the same” as the last PPK meeting, inflation report and current disclosures.

MONITORING OF MEASURES ON CREDIT GROWTH

Participants got the impression that the recovery in economic activity “kept its strength” as of the first quarter of the year. While the similar message is also included in the PPK summaries, one participant said, “We do not receive a new monetary policy message, and we understand that there will be no change in the year-end inflation forecast of 8.2 percent. However, we got the impression that the CBRT could take a macroprudential measure on loan growth and composition in the short term. ”

“We understand that the bank’s increase in consumer loans, and that these loans want to limit the impact of imports, current account deficit, inflation, and commercial loans that will not have similar negative effects on the loan composition. We think that the precautionary measure will be steps to deter consumer loans through ZK, which we have seen in the past. ”

CBRT did not comment on the subject.

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“MEASURES WILL BE REVIEWED”

In the last PPK meeting, the CBRT pointed out that the loan interest rates declined due to the “strong” interest rate cuts since July, and that consumer loans grew faster than the increase in total loan growth.

It was stated that the effects of developments in credit growth and composition on external balance and inflation were closely monitored, and in this context, the Board evaluated that macro prudential measures for credit growth and composition could be reviewed in order to protect gains in the current account balance in terms of price stability and financial stability.

COMPULSORY PROVISION ARRANGEMENT HAS COME TO THE AGENDA

On the other hand, a report in Reuters in mid-February stated that after the increase rate in consumer loans exceeded 30 percent as of the end of January, a reserve requirement was planned to limit this increase in order to observe inflation, imports and thus the current account deficit.

The new system, in which credit growth was encouraged with lower reserve requirements and higher interest rates, was put into operation by the CBRT in August last year.

The system was then switched from the consumer price index to the calculation in calculating credit growth. It has also been updated to encourage long-term commercial loans and housing loans.

The institution is trying to prevent the loan types that will increase the inflation or current deficit from growing rapidly and preventing other types of loans from raiding.

Investors said that they did not receive a new message for monetary policy in the coming period, and that they repeat the messages of the CBRT in the last period.

THE PRESIDENT IS WAITING FOR THE DECREASE OF INFLATION

As the current monetary policy message, CBRT President Murat Uysal said, “The many indicators we follow towards the main trend point to a course in line with the targeted decline in inflation. We anticipate that inflation will gradually decline towards our year-end forecast after remaining flat at current levels for a while. ”

Inflation is at 12.37% in February, according to data released this week. The CBRT’s year-end forecast is at 8.2%.

According to Reuters’ surveys, while the market’s inflation forecast is around 10%, economists think that the depreciation in TL poses an upward risk on the forecasts, while the products whose prices are controlled by the public pose a downward risk.

In the last six PPK meetings chaired by the CBRT Murat Uysal, it made a total interest reduction of 1,325 basis points. While the bank has lowered its policy rate to 10.75%, it also gives the message that it has completed most of the interest rate cut recently. However, there is no message that the discounts are completely over.

On the other hand, as reported in a report published yesterday in Reuters, interest in the investors’ talks has decreased this time due to coronavirus concerns. (Reuters)