ANKARA - The Central Bank said on Tuesday that it was obvious that a possible operation against Iraq would have a pressure on currencies and oil prices for some time and a negative impact on Turkish economy.
The Central Bank issued the monetary policy report for January 2003.
The report said that there were some risks as well as some positive developments and important achievements in price stability as of the beginning of 2003.
The report listed positive developments as occurrence of a stable government after the elections, entrance into growth process, settlement of floating exchange rate regime at a great extent although it was not the desired level, and reduction in inflationist expectations at a great extent when compared with the beginning of 2002.
It was possible to divide risks which might affect inflation rate in 2003 into two groups, including external shocks and risks resulting from policies and economic developments, the report said.
The report noted that the most significant external shock possibility was developments regarding Iraqi crisis.
Markets and public should be convinced that structural reforms would be accelerated and continued and public finance discipline would be continued in order to minimize the negative effects of such an operation on the economy and inflation, the report said.
The report pointed out that internal risks could be inflationist pressure, failure in ensuring financial discipline, deficiencies in reform process, particularly banking reforms, and failure in good management of inflationist expectations.
Continuation of financial discipline and reforms would be a determining factor in succeeding in fight against inflation in 2003, the report added.
(BRC-AY) 18.02.2003