MOSFED Head Güleç's Critical Call: A New Policy Tool in the Inflation Fight

Ahmet Güleç, President of MOSFED, argued that fighting inflation cannot be sustained solely through a one-dimensional interest rate policy, stating that a permanent disinflation process requires the coordination of monetary and fiscal policies, and specifically called for the gradual reduction of withholding tax on deposits during the interest rate cut cycle.

The Strategic Role of Withholding Tax in Inflation Dynamics

Güleç emphasized that inflation is not driven solely by aggregate demand, but is also shaped by expectations, exchange rates, and production costs. He noted that while reducing withholding tax does not directly lower banks' costs, it increases the net return for savers. This regulation is projected to improve banks' funding conditions by increasing the volume and maturity of TL deposits.

Savings Incentives and the Burden on the Real Sector

The chain effect of a reduction in deposit withholding tax on financial stability and production costs is summarized as follows:

■Lower withholding tax protects the net interest income of individual investors, preventing a shift towards foreign currency and gold while strengthening TL savings.

■Easier access to deposits for banks reduces funding pressure, allowing commercial loan rates to move downward.

■Lowering working capital costs positively impacts production costs and exporter competitiveness, indirectly contributing to the fight against inflation.

The Relationship Between Credit Costs and Pricing

Arguing that the financing cost of the real sector is directly linked to inflation, Güleç stated that if credit costs for production and investment-oriented businesses increase, this burden is reflected in final prices; therefore, lowering credit costs should be viewed not just as a growth strategy but as an essential disinflation tool.

From a wealth management perspective, a maturity-sensitive reduction in deposit withholding tax acts as a critical "net yield shield" for savers. In a period where interest rates enter a downward trend, rationally reducing this tax keeps the appeal of TL assets vibrant, preventing exchange rate pressure. This enhances the banking sector's capacity to find cheap and long-term funding, contributing to the maintenance of reasonable levels for individual loans and credit card interest rates, thereby sustaining financial stability.