Last minute! CBRT Announces Its Interest Rate Decision! Earthquake Emphasis in CBRT Decision!

The Central Bank of the Republic of Turkey announced its interest rate decision for February.

The CBRT cut the interest rate by 50 basis points to 8.5%. According to the Investing survey, the expectation was a 50 basis point cut.

The Central Bank said in its decision on interest rates:

“Although the recently announced data on economic activity has been at more positive levels than expected, recession concerns continue in developed countries’ economies due to the impact of geopolitical risks and interest rate hikes.

Leading indicators before the disaster of the century pointed out that in the first quarter of 2023, domestic demand was more lively than foreign demand and the growth trend was on the rise. The effects of the earthquake on production, consumption, employment and expectations are comprehensively evaluated. Although the earthquake is expected to affect the economic activity in the near term, it is expected that it will not have a permanent effect on the performance of the Turkish economy in the medium term.

With the support of the holistic policies implemented, improvements in the level and trend of inflation began to be observed, and the effects of supply-demand imbalances caused by the earthquake on inflation are closely monitored. It has become even more important that financial conditions are supportive in terms of sustaining the acceleration in industrial production and the increasing trend in employment. In this context, the Committee decided to reduce the policy rate by 50 basis points. The Committee is of the opinion that this measured post-discount monetary policy stance is sufficient to support the necessary post-earthquake recovery by maintaining price stability and financial stability. The effects of the earthquake in the first half of 2023 will be closely monitored.”