"We expect the interest rate reduction process to continue"

TIM Chairman Mehmet Büyükekşi issued a press release about the interest rate reduction decision taken by the Central Bank. Chairman Büyükekşi said in his statement that the interest rate reduction decision was met positively for the country and for the exporters and the reductions must continue in the future period.

TIM Chairman Büyükekşi said the following:

·         We find the interest rate reduction decision of Turkish Central Bank favorable for our country and for exporters; however we expect the reductions to continue.

·         The relief in the global markets and the developments in Turkish economy present a suitable environment for interest rate reductions in the future period.

·         Interest rate reductions will support the increasing of investments in our country and increasing of the exports.

·         In a low interest rate environment will make more investment in their R&D activities, innovative ideas will be implemented more easily.

“We, as Turkish Exporters Assembly, have welcomed the decision taken at the first meeting of Turkish Central Bank in the term of Mr. Murat Çetinkaya to decrease the interest rates 50 base points from the upper band very positively for our country and for our exporters. Our expectation is that these interest rate reductions will continue in the future period.

In 2015, as a result of FED's interest rate hike process dollar was strengthened in global markets and capital exits were experienced in developing economies as a result of this; so monetary policies applied in these countries were tightened. In 2016, on the other hand, after the FED interest rate increase, relaxation was experienced in world economies. In this process, 13 countries including India, Norway and Indonesia went for interest rate reduction; countries such as Sweden, Switzerland and Japan began to apply negative interest. European Central Bank (ECB) lowered the policy interest rate to zero level. Also, ECB continued its expansion policy by increasing bond buying program from 60 billion Euros to 80 billion Euros. Considering that Turkey makes 45% of its exports to EU countries, it is certain that the ECB decisions will have positive impacts on Turkey in the future period.

While the international events are developing in our favor in the last period, the developments in Turkish economy also present quite a favorable view. The current deficit that retreated significantly in 2015 continues to drop in 2016. The current deficit fell 28.3% in the first two months of the year to the level of 30.5 billion dollars. In February, after a period of 14 months, exports entered a trend of rise and the decreasing trend in imports continues; these show us that the current deficit will continue to decrease in the next period, also. On the other hand, food inflation, which had cruised at high levels in 2014 and 2015, began to decrease in the last period and the impact of dollar on prices weakened; based on these we foresee that the inflation, that fell to 7.5% in March will drop even further.

All these positive developments present us serious opportunities for additional interest rate reductions in the next period. 2016 must be year of jumping forward for Turkey. In order to display this performance, the high interest rates, that stand as a barrier in front of our investors and exporters, must be brought down to reasonable levels as soon as possible. With further reductions in the interest rates, recently decreasing investments will be boosted, with increasing investments exports will leap forward. Also, firms will speed up their R&D expenditures in a low interest rate environment; low cost credits will make it easier to implement innovative ideas.

In summary, as Turkish Exporters Assembly we are glad about the decision of the Central Bank today for the interest rate reduction of 50 base points at the upper band, but we do not consider it sufficient and expect the reduction process to continue in the coming months, also.”