Central Bank of Turkey announces interest rate decision!
The Central Bank of the Republic of Turkey (CBRT) announced its interest rate decision. In line with expectations, the Monetary Policy Board decided to leave the policy interest rate steady at 14 percent.
In the decision text of the PPK, while keeping the interest rate constant, the energy cost increases caused by the hot conflict environment related to the increase in inflation were highlighted and the transience was emphasized.
The CBT's statement reads as follows:
"Geopolitical risks that escalate into conflict and variants in the epidemic keep alive the downside risks to global and regional economic activity and lead to even greater uncertainties. The recovery in global demand, commodity prices cruising high in energy supply constraints, particularly in some industries and transportation costs become more apparent in high-level leads to an increase in producer and consumer prices on an international scale. The effects of high global inflation on inflation expectations and international financial markets are closely monitored. However, the central banks of developed countries assess that the rise in inflation may last longer than expected due to rising energy prices and supply-demand mismatch. In this context, economic activity, and inflation expectations in the labour market, depending on the differing views among the countries of the central banks of developed countries, although decomposition is observed in the communication of monetary policy, central banks supportive monetary stance, he still continues to reduce the asset purchase program continues.
RISKS ARE CLOSELY MONITORED
Capacity utilization levels and other leading indicators indicate that economic activity in the country remains strong, even if regional differences arise, as well as foreign demand with a positive impact. While the share of sustainable components in the composition of growth is increasing, the risks arising from energy prices are closely monitored in the current account balance.
The fact that the current account balance has become permanent at sustainable levels is important for price stability. The Board has assessed that the growth rate of loans, including long-term Turkish lira investment loans, and the meeting of available financing sources with economic activity in accordance with its purpose will play an important role in terms of financial stability.
THE DISINFLATIONARY PROCESS WILL BEGIN
The observed rise in inflation in the recent period; hot energy cost increases caused by the conflict, economic fundamentals pricing formations away from the temporary effects of the global energy, food and agricultural commodity prices and increases in delays in the procurement process, such as supply-side factors and demand developments is effective. The board, sustainable price stability and Financial Stability Facility and strictly implemented the steps that are being taken to, along with the restoration of peace and the elimination of global inflation with base effects, dezenflasyonist envisages that the process will start. Within this framework, the Board decided to keep the policy interest rate constant. The cumulative effects of the decisions taken are being closely monitored and a wide-ranging policy framework review process is underway that promotes permanent and strengthened lira in all policy instruments of the CBRT in order to institutionalize price stability in a sustainable way during this period.
THE MEDIUM-TERM INFLATION TARGET IS 5 PERCENT
The CBRT will continue to use all available instruments with determination within the framework of the lira strategy until there are strong indicators indicating a permanent decrease in inflation in line with the main objective of price stability and until it reaches the medium-term target of 5 percent. Provided stability in the general level of prices, the country risk premium and reverse the decline in currency reserves, the upward trend in currency substitution and financing costs will have a positive impact on macroeconomic stability and financial stability through persistent decline. In this way, the appropriate ground will be formed for the healthy and sustainable continuation of investment, production and employment growth."
