The Central Bank of the Republic of Turkey (CBRT) has announced its interest rate decision. The Monetary Policy Committee (Council) decided to maintain the one-week repo auction rate, which is the policy rate, at 14%. The Board has not changed the interest rate in the last three meetings.
In the text of the resolution, it is stated that “geopolitical risks, the impact of which continues, maintain the downside risks to global and regional economic activity and aggravate uncertainties”, and the uncertainties concerning world food security , high commodity prices, supply constraints in some sectors, particularly energy, are becoming more evident. It was reported that the high level of transport and transport costs have led to an increase in international producer and consumer prices.
In the text, “The effects of high global inflation on inflation expectations and international financial markets are being closely watched. However, central banks in developed countries consider that the rise in inflation could take longer than expected due to rising energy prices and the mismatch between supply and demand. In this context, although there is a divergence in the monetary policy communications of the central banks of the developed countries due to the divergent outlook for economic activity, the labor market and inflation expectations between the countries, the central banks still maintain their favorable monetary positions and continue their monetary policy buying programs by reducing them.
Capacity utilization levels and other leading indicators indicate that domestic economic activity remains strong, although regional differences are emerging, with the gradually increasing positive impact of foreign demand. While the share of sustainable components in the composition of growth is increasing, energy price risks in the current account balance persist.
It is important for price stability that the current account balance becomes permanent at sustainable levels. The council considered that the growth rate of loans, including long-term investment loans in Turkish liras, and the adequacy of accessible financing resources with economic activity according to their objective are important for stability. financial. In this context, the Board decided to strengthen the macroprudential policy system.
In the recent rise in inflation; Increases in energy costs caused by geopolitical developments, temporary effects of price formation away from economic fundamentals, strong negative supply shocks caused by increases in world prices for energy, food and agricultural raw materials continued to have an influence.
The Council expects the disinflation process to begin with the restoration of the global environment of peace and the elimination of the base effects of inflation, as well as measures taken to establish lasting price and financial stability. In this context, the Board decided to keep the key rate constant.
The cumulative effects of the decisions taken are closely monitored, and a comprehensive process of reviewing the policy framework that encourages a permanent and reinforced reading of all the policy instruments of the CBRT continues in order to institutionalize price stability in a sustainable way over the course of the year. of this period.
In the text, in which it is stated that the CBRT will continue to use all instruments resolutely within the framework of the mobilization strategy, until strong indicators indicating a permanent fall in inflation appear and the medium-term objective of 5% is achieved in accordance with with the main objective of price stability, the text says: “The stability to be achieved in the general level of prices, the reduction in country risk premiums, This will positively affect the macroeconomic stability and financial stability thanks to the continuation of reverse currency substitution and the upward trend in foreign exchange reserves and the permanent decline in financing costs. Thus, a fertile ground will be created for the continued growth of investment, production and employment in a healthy and sustainable manner. The Council will continue to make its decisions in a transparent, predictable and data-driven framework.
PREVIOUS DECISIONS ON CENTRAL BANK INTERESTS
The CBRT decided to cut the interest rate by 500 basis points in September, October, November and December last year, and brought it down to 14%. In January, February and March, the bank did not change the interest rate as expected.