Panel “Monetary Policy Under Uncertainty” Held at the Istanbul Economic Forum

A panel titled “Monetary Policy Under Uncertainty” has been held at the Istanbul Economic Forum, organized by the Central Bank of the Republic of Türkiye at the Istanbul Financial Center. The panel was moderated by Eddie Yue, Chief Executive of the Hong Kong Monetary Authority. The discussion examined how differing monetary policies, price misalignments in markets, and technological risks affect monetary policy decisions.

Taleh Kazimov, Chairman of the Central Bank of Azerbaijan, said that high energy prices affect the current account balance and national reserves, while the Central Bank is currently focusing more on price stability. He noted that rapid progress is being observed in the field of artificial intelligence, and that the government is in the final stage of agreements with global partners on the management of hyperscale data centers. Kazimov added that Azerbaijan is significantly affected by imported inflation: “In terms of monetary policy, our main effort is to preserve our stable currency. Our currency has remained stable since December 2017.”

Yannis Stournaras, Governor of the Bank of Greece, emphasized that the European economy has remained resilient despite geopolitical tensions and the energy crisis. He said Greece is growing twice as fast as the eurozone average, while long-term inflation expectations are around 2 percent. Stournaras said that, because of uncertainty, the approach has shifted from “forward guidance” to a flexible “framework guidance” model, with decisions made meeting by meeting.

Mihály Varga, Governor of the Central Bank of Hungary, said that inflation in energy-import-dependent Hungary reached 24 percent in January 2023 and fell to 1.6 percent in September as a result of decisive steps. He announced that the inflation target is being lowered to 2.5 percent, in line with European Central Bank standards, effective January 1, 2028. Varga warned that continuous market support may create “moral hazard” and recommended preferring temporary instruments limited in time and scale. He added that in times of uncertainty, a single baseline scenario cannot be relied upon, and that central banks should prepare alternative scenarios and share them with the public.

Eddie Yue said that central banks should not merely react to data, but should be able to distinguish in advance whether shocks are temporary or permanent.