The Central Bank of the Republic of Turkey announced its February interest rate decision following the Central Bank Monetary Policy Committee meeting held for the second time this year. The interest rate was kept constant at 14% this month, as it was last month.
The Central Bank of the Republic of Turkey announced its highly anticipated interest rate decision today. The meeting was chaired by President Şahap Kavcıoğlu. Central Bank Monetary Policy Committee In the statement made after the meeting, the Central Bank announced the second interest rate decision of the year and once again announced that there was no change in the interest rate.
According to the Central Bank’s statement interest rate held steady at 14%. The Central Bank, lastly, cut the interest rate by 100 basis points on December 16, 2021, reducing the interest rate to 14%. After the meeting held last month, the interest rate was kept constant at 14%. The CBRT was not expected to make any rate cuts this month either.
Central Bank’s statement: The rise in inflation may take longer than expected
“Variants in the epidemic and increased geopolitical risks keep the downside risks on global economic activity alive and leads to increased uncertainty.. The recovery in global demand, the high course of commodity prices, supply constraints in some sectors, especially energy, and the high level of transportation costs lead 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, central banks of developed countries are struggling with increasing energy prices and supply-demand mismatch. The rise in inflation may take longer than expected. is evaluating. In this context, despite the divergence in the monetary policy communications of the central banks of developed countries due to the differing outlook in economic activity, labor market and inflation expectations among countries, central banks still maintain their supportive monetary stances and continue their asset purchase programs.
Capacity utilization levels and other leading indicators point to a strong course of domestic economic activity with the positive impact of foreign demand. While the share of sustainable components in the composition of growth is increasing, current account balance give a surplus in 2022 foreseen. The continuation of the improvement trend in the current account balance is important for price stability. The Board considers that long-term Turkish lira investment loans will play an important role in achieving this goal.
In the recent rise in inflation; Supply-side factors such as pricing formations far from economic fundamentals, increases in global energy, food and agricultural commodity prices, and disruptions in supply processes and demand developments are influential. With the steps taken for the establishment of sustainable price stability and financial stability and which are carried on with determination, the Board decided that the base effects in inflation would disappear. that the disinflationary process will begin foresees. In this framework, the Board decided to keep the policy rate constant. The cumulative effects of the decisions taken are closely monitored, and a comprehensive policy framework review process that encourages permanent lira depreciation in all policy instruments of the CBRT is carried out in order to reshape price stability on a sustainable basis in this period.
CBRT, in line with the main objective of price stability, until strong indicators pointing to a permanent decrease in inflation and until the medium-term 5% target is reached. will continue to use all the tools at its disposal resolutely within the framework of the liraization strategy. The stability to be achieved in the general level of prices will positively affect macroeconomic stability and financial stability through the decrease in country risk premiums, the continuation of reverse currency substitution and the upward trend in foreign exchange reserves, and the permanent decline in financing costs. Thus, a suitable ground will be created for the continuation of investment, production and employment growth in a healthy and sustainable way.
The Board will continue to take its decisions in a transparent, predictable and data-oriented framework.”