Turkish Central Bank keeps interest rates unchanged - ednews.net

25 May, Wednesday

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Turkish Central Bank keeps interest rates unchanged

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The Turkish Central Bank on Thursday kept its one-week repo rate – also known as the policy rate – steady at 14% in line with market expectations, Yeni Safak reports. 

All economists surveyed by Anadolu Agency on Tuesday predicted the bank’s Monetary Policy Committee would keep the policy rate constant at 14%.

he bank said in a statement that it is expecting a disinflation process to start on the back of measures taken to date and financial stability along with the decline in inflation thanks to base effects.

Yet it also acknowledged it is closely monitoring the effects of high global inflation expectations on international financial markets, as major central banks believe the rise in inflation may last longer than previously expected due to climbing energy prices and imbalances between supply and demand.

It also underlined the level of capacity utilization and other leading indicators showing that domestic economic activity remains strong thanks to robust external demand.

"Strengthening of the improving trend in the current account balance is important for price stability," the statement said, adding: "The Committee assesses that extending long-term Turkish lira investment credit will play a significant role in achieving this target."

The bank also said the share of sustainable components of economic growth is growing, with the current account balance expected to post a surplus in 2022.

The bank “will continue to use all available instruments decisively within the framework of liraization strategy until strong indicators point to a permanent fall in inflation," it underlined.

Turkiye saw a 48.69% annual hike in consumer prices in January.

During the month, the bank sent an open letter to the government to explain why inflation diverged from its target of 5% and measures to reach its goals on prices.

The statement also underscored that the bank is currently conducting a "comprehensive monetary policy review" to achieve permanent price stability, and the strategy it adopts to boost the use of Turkish lira in the country – "liraization" – would be "the most crucial part of this process."

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