"the Best Contribution To Growth Is To Maintain Price Stability"

- The best contribution to growth from a central bank would be to maintain price stability, said Erdem Basci, Central Bank of Turkey Governor.

High inflation was costly in terms of allocational efficiency, Basci said in a speech on "On the Value of Price Stability" at a conference in Budapest, "Reforms in human capital, labor market, technology, innovation and physical infrastructure are going to boost the growth potential in Turkey."

"Maintaining low and stable inflation would be the best contribution to growth from a central bank. Both high inflation and deflation are detrimental to growth" he added.

Stability of long term government bond yields iwas another condition for the stability of velocity, and for price stability, he said, adding that the negative nominal deposit rates might have a potential to increase velocity, by sharply reducing the real money demand.