Last minute: Central bank announces interest rate decision

The Central Bank of the Republic of Turkey has decided to keep interest rates constant at 14%. Central banks have strong indicators of a permanent decline in inflation, in line with the main purpose of price stability, and everything that is freely available within the framework of a relaxation strategy until it reaches 5% in the medium term. Continue to use the tools of. The goal has been achieved.
The Central Bank of the Republic of Turkey (CBRT) did not change its weekly benchmark repo rate in line with market expectations.

The weekly repo rate remained at 14.00 percent, according to a statement made after the CBRT Monetary Policy Committee (MPK) meeting.

After reducing interest rates by 500 basis points at the last four meetings last year, CBRT did not make any changes to interest rates at the first two meetings of the year.

According to the CBRT Market Participant Survey, the consumer price index at the end of the year was 40.47%, and the consumer price index for 12 months was 26.43%. Inflation expectations for CBRT are 23.2 percent at the end of 2022 and 8.2 percent at the end of 2023.

The Turkish Institute of Statistics (TÜ0054K) announced that consumer prices rose 54.44 percent each year in February.

The next CBRT meeting will be held on April 14th.

After the meeting, the following statement was made.

“Epidemic conflicts and varieties of geopolitical risks take advantage of downside risks to global and regional economic activity and further increase uncertainty. Recovery of global demand, soaring commodity prices, one. High levels of transportation and transportation costs in some sectors, especially energy supply constraints, lead to higher prices for producers and consumers on an international scale. The impact of high global inflation on inflation expectations and international financial markets is in-depth. However, central banks in developed countries are responsible for rising inflation due to rising energy prices and supply-demand mismatches. In this context, differences in economic activity, labor markets, and outlooks for inflation expectations Correspondingly, there will be monetary policy communication with central banks in developed countries. Central banks are still maintaining a supportive financial stance and continuing their asset purchase programs by reducing them.

Capacity utilization and other key indicators show that domestic economic activity remains strong and has a positive impact on external demand, despite regional differences. Risks arising from current account energy prices are closely monitored while the proportion of sustainable factors in the composition of growth is increasing. A sustainable and permanent balance of payments is important for price stability. The Board evaluated that the growth rate of loans, including long-term Turkish lira investment loans, and the meeting of sources of funding accessed for economic activities according to their purpose, play an important role in fiscal stability.

Recent rises in inflation have led to rising energy costs due to the fierce conflict environment, the temporary impact of price formation away from economic fundamentals, rising prices for global energy, food and agricultural products, and the development of supply processes and demand. Supply-side factors such as disruption are effective. The Board expects the disinflation process to begin with the restructuring of the world peace environment and the elimination of the fundamental effects of inflation, along with the steps taken to establish sustainable price and financial stability. increase. In this regard, the Board has decided to keep the policy rate constant. The cumulative impact of decisions made is closely monitored and encourages lasting and enhanced relaxation in all CBRT policy instruments to institutionalize price stability in a sustainable manner. The comprehensive policy framework review process will continue during this period.

In line with the main purpose of price stability, CBRT is free within the framework of its relaxation strategy until a strong indicator of a permanent decline in inflation emerges and the medium-term 5% target is achieved. We will continue to use all the tools available for. Was achieved. Stability achieved at general price levels is macroeconomic stability and finance through lower national risk premiums, continued reverse currency substitution and rising foreign exchange reserves, and a permanent decline in funding costs. Has a positive effect on the stability of the. Therefore, it lays the right foundation for continued investment, production and employment growth in a healthy and sustainable way.

The Board of Directors continues to make decisions in a transparent, predictable and data-oriented framework. “

Attract details with central bank text

Earlier central bank statements pointed to a pandemic, while the latest statement pointed to processes related to the Russian-Ukraine war.

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