The central bank has announced interest rate decisions.
As expected, the CBRT Monetary Policy Committee (PPK) kept the policy rate constant at 14%.
In a survey conducted prior to the decision, the majority of participants did not expect CBRT to change interest rates.
CBRT decided to reduce interest rates by 500 basis points in September, October, November and December last year, reducing it to 14%. As expected, banks did not change interest rates in January and February.
Increased energy costs due to war, affecting inflation
In the bank statement, the following statement was issued:
“Geopolitical risks that have turned into conflicts and epidemic variants take advantage of downside risks to global and regional economic activity and lead to increased uncertainty.
Recovery of global demand, soaring commodity prices, more pronounced supply constraints in some sectors, especially energy, and high levels of transportation costs will lead to higher producer and consumer prices on an international scale.
Central banks in developed countries have different policies
The impact of high global inflation on inflation expectations and international financial markets is closely monitored. However, central banks in advanced economies believe that rising energy prices and supply-demand mismatches can take longer than expected to raise inflation.
In this context, depending on different outlooks between countries in economic activity, labor markets, inflation expectations, Differences in monetary policy communication of developed country central banks However, central banks still maintain a supportive financial stance and continue 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.
Global energy, commodities and food prices affect inflation
The recent rise in inflation has led to a fierce conflict environment, rising energy costs caused by the temporary impact of pricing away from economic fundamentals. Rising global energy, food and agricultural prices Supply-side factors such as supply process disruption and demand development.
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 framework, the Board has decided to keep the policy rate constant.
All tools are used within the framework of the LIRATING strategy
The cumulative impact of decisions made is closely monitored and comprehensively encourages lasting and enhanced relaxation in all CBRT policy instruments to institutionalize price stability in a sustainable manner. The policy framework review process will continue during this period.
In line with the main purpose of price stability, CBRT uses all free tools until a strong indicator of a permanent decline in inflation is generated and the medium-term 5% target is achieved. increase. Within the framework of a relaxation strategy I will continue to use it with determination.
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.