Central Bank of Turkey Reveals Interest Rate Decision
The Central Bank of the Republic of Turkey (CBRT) has announced its expected interest rate decision, keeping the policy rate unchanged at 50%. This decision is viewed as a step aligned with market expectations.
In the statement released following the interest rate decision, it was highlighted that a decline in the main trend of inflation was observed in October. It was indicated that the slowdown in domestic demand has reached supportive levels for the decrease in inflation. While core goods inflation remains at low levels, improvement signals have become more evident in service inflation. However, it was emphasized that unprocessed food inflation continues to maintain a high level due to the effects of temporary supply conditions.
The commitment to a robust monetary policy stance is being maintained. The decision statement expressed that the steadfastness of monetary policy, supported by the balancing of domestic demand, real appreciation of the Turkish lira, and correction in inflation expectations, would lower the main trend of monthly inflation and strengthen the disinflation process. It was noted that a significant and sustained decrease in monthly inflation must occur, and that the tight monetary policy stance would be maintained until inflation expectations approach the projected forecast range.
Accordingly, the level of the policy interest rate will continue to be determined in consideration of inflation developments and expectations. While reiterating its cautious stance against upside risks to inflation, the Committee emphasized that monetary policy instruments would be effectively utilized in the event of a marked and lasting deterioration in inflation.
Measures will be taken regarding the credit and deposit markets. The decision statement also indicated that in the case of unexpected developments in credit and deposit markets, the monetary transmission mechanism would be supported by additional macroprudential steps. It was mentioned that liquidity conditions are being closely monitored, and sterilization tools will continue to be used effectively.
The CBRT announced that it would determine its policy decisions by considering the lagged effects of monetary tightening, aiming to reduce the main trend of inflation and achieve the medium-term target of 5% inflation. The Committee stated that it would continue to use all available tools decisively in line with its primary goal of price stability.