---
title: "Central Bank: Downside Risks In The Economy Still Important"
date: "2015-01-27 16:35:01"
author: "DHA"
tags: "İstanbul"
canonical_url: "https://www.mynet.com/central-bank-downside-risks-in-the-economy-still-important-180101662793"
original_url: "https://www.mynet.com/central-bank-downside-risks-in-the-economy-still-important-180101662793"
---
# Central Bank: Downside Risks In The Economy Still Important
\- Central Bank of Turkey (CBOT) said downside risks regarding economic activity were keeping their importance for the upcoming period, due to volatility in the markets and worsening confidence, as risks limiting the growth.
"The lingering volatility across global financial markets and the sluggish course of confidence indices may cause private final demand to provide limited support to growth" the Central Bank said in the summary of the monetary policy committee meeting, released on Tuesday.
"In the case of an additional slowdown in external demand and a sizeable decline in global growth rates, the decrease in commodity prices will pull inflation down but at the same time lead to notable adverse effects on economic activity. Under such circumstances, the Committee will employ the policy tools to support the economic activity."
The growth composition expected to change in favor of domestic demand in the upcoming period due tı ongoing weakness in growth across European countries, the largest export market of Turkey, and geopolitical developments in neighboring countries which limit the growth of exports.
"Yet, with improved financial conditions and income effect of falling oil prices, domestic demand may see some recovery" CBOT said in the summary, adding that external demand remained weak whereas domestic demand contributes moderately to growth.
"This change in the growth composition might lead to a widening in the non-energy current account deficit to some extent but the overall current account deficit is expected to narrow further down thanks to the improvement in the energy trade balance."
There were many factors that might have a favorable effect on the inflation outlook for 2015, according to the CBOT, "The tight monetary policy stance and the acroprudential measures continue to have a favorable impact on inflation, especially on inflation excluding energy and food indicators."
Falling commodity prices, in particular oil prices, contributed to disinflation which resulted a notable decline in medium-term inflation expectations recently, the CBOT said. "In light of these positive developments, the Committee has decided on a measured cut in the one week repo rate."
Inflation expectations, the pricing behavior and other factors that affect inflation would be further closely monitored and the tight monetary policy stance would be maintained by keeping the yield curve flat until there is a significant improvement in the inflation outlook, the CBOT added.
