Under-the-mattress gold weakens inflation fight: Karahan

ISTANBUL

Central Bank Governor Fatih Karahan has warned that the country’s vast stock of “under-the-mattress” gold — estimated at around $500 billion — is undermining efforts to bring inflation under control.

Speaking at a panel in Amsterdam during a farewell event for European Central Bank official Klaas Knot, Karahan said that Turkish households’ strong preference for holding gold outside the financial system complicates monetary policy, BloombergHT reported.

Karahan also discussed the global role of the U.S. dollar, pointing out that a weaker dollar is generally positive for emerging markets. However, he cautioned that Türkiye’s unique gold dynamic offsets some of those benefits.

Reiterating the central bank’s stance, Karahan added:” We must keep monetary policy tight for a while longer.”

The annual inflation rate in Türkiye rose unexpectedly to 33.29 percent in September from 32.95 percent in August, as consumer prices jumped 3.23 percent month-on-month, exceeding forecasts, the statistics authority reported on Oct. 3.

Policymakers are set to meet on Oct. 23 to review the benchmark interest rate, with the year’s final rate‑setting meeting scheduled for Dec. 11.

At its previous meeting on Sept. 11, the Monetary Policy Committee cut the one‑week repo auction rate to 40.5 percent from 43 percent — a larger‑than‑expected move that followed a 300 basis point reduction in July.