Karahan: Domestic demand slowed down, growth slowed down

DOMESTIC DEMAND SLOWED DOWN, GROWTH STOPPED

Karahan stated that growth slowed down due to the weakening of domestic demand and said:

"Taken as a whole, the data point to a continuation of the disinflation process despite more challenging supply conditions. Understanding these distinctions is important for assessing both the inflation outlook and our monetary policy stance. While monthly data alone is informative, it can also be volatile. Our policy assessment must look beyond those fluctuations while continuing to pay attention to changes in the underlying trend."

FOREIGN TRADE BALANCE HAS IMPROVED

Karahan said that geopolitical developments increased oil prices, and the expansion in refinery margins caused this effect to become more evident.

Emphasizing that they have tightened monetary policy in order to limit the risks regarding the inflation outlook, Karahan stated that the foreign trade balance has improved and travel revenues have maintained their strong course.

Stating that credit growth has slowed down significantly since the spring, Karahan stated that the quarterly recovery in economic activity is supported by strong exports.

Stating that the slowdown in domestic demand and strong exports support the improvement in the current account balance, Karahan said that high-frequency data indicate that the slowdown in domestic demand will continue in the third quarter.

ENERGY PRICES PUSH INFLATION UP

Stating that the increase in energy prices increases inflation through both direct and indirect channels, Karahan noted that if the data are evaluated as a whole, there has been a slowdown in the main trend of inflation recently.