Last minute! Central Bank announces interest rate decision

The Central Bank announced its decision on interest rates. As expected, the CBRT Monetary Policy Committee (PPK) kept the policy rate constant at 14%. In surveys conducted prior to the decision, the majority of participants did not expect the CBRT to change interest rates.

“MACRO PREVIOUS POLICY FRAMEWORK” ENTERS IN-TEXT FOR THE FIRST TIME

In the statement issued after the meeting, the Central Bank said:The macroprudential policy framework will also be strengthened.was underlined. These expressions have never been used in the texts of previous meetings of the CBRT.

The relevant part of the text is as follows:

“The board 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 in accordance with their objective are important for the stability Within this framework, the board has decided to strengthen the set of macroprudential policies.”

The following was stated in the press release:

“Uncertainties regarding global food security, high commodity prices, growing supply constraints in some sectors, particularly in energy, and high transport costs are leading to higher producer prices and consumption globally. High global inflation affects inflation expectations and international financial markets. However, central banks in developed countries believe that the rise in inflation may take longer than expected due to rising energy prices and the mismatch between supply and demand.Although there is a divergence in monetary policy communications, central banks still maintain their monetary support stance and continue to reduce their asset purchase programs.

‘THE DECISION TO STRENGTHEN THE SET OF MACRO PREVENTION POLICIES’

Emphasizing that capacity utilization levels and other leading indicators show that domestic economic activity remains robust with the gradually increasing positive effect of foreign demand, even if regional differences appear, “While the share of the components composition of growth increases, risks arising from energy prices in the current account balance It is important that price stability becomes permanent at sustainable levels The Board assessed that the growth rate of loans, including long-term investment loans in Turkish liras, and the gathering of accessible financial resources whose economic activity is consistent with their purpose are important for financial stability, decided to strengthen macroprudential policy.

“CBRT WILL CONTINUE TO USE ALL THE TOOLS I HAVE”

In the recent rise in inflation; It has been stated that rising energy costs caused by geopolitical developments, temporary effects of price formations away from economic fundamentals, strong negative supply shocks caused by increases in global energy prices , foodstuffs and agricultural raw materials were effective.

“The Council expects the disinflation process to begin with the restoration of the global peace environment and the elimination of the base effects of inflation, as well as measures taken to establish lasting price stability and financial stability. As part of this, the Board decided The cumulative effects of these decisions are being closely monitored and a comprehensive policy framework review process that encourages permanent and enhanced readability across all CBRT policy instruments continues during this period in order to institutionalize price stability in a sustainable manner It will continue to use all the tools at its disposal with determination within the framework of the mobilization strategy until strong indicators point towards the emergence of the medium-term objective of 5% The drop in the index will positively affect macroeconomic stability and financial stability through the continuation of the reverse substitution of currencies 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.

MARKETS AFTER THE DECISION

After the CBRT’s decision not to change interest rates as expected, there was no reaction in the markets. USD/TL 14.62; Euro/TL continues to trade at 15.97. On the stock market, the BIST 100 index is at 2,477 points with an increase of 0.70%.

INTEREST KEEP FIXED IN THE LAST 3 MEETINGS

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.

President Şahap Kavcıoğlu said at the general assembly held at the end of March that they were reviewing the policy as part of the Liraization strategy, so they left the interest rate constant.