The Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee convened under the chairmanship of Central Bank Governor Şahap Kavcıoğlu.
At the meeting, where the markets turned their eyes, it was decided to keep the one-week repo auction rate, which is the policy rate, at 8.5 percent.
In the announcement regarding the bank’s interest rate decision, it was noted that;
The effects of high global inflation on inflation expectations and international financial markets are closely monitored. Financial markets reflect expectations that central banks will soon end their rate hike cycles.
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, but the effects of supply-demand imbalances caused by the earthquake on inflation are closely monitored. Supporting financial conditions became even more important after the earthquake in terms of sustaining the acceleration in industrial production and the increasing trend in employment. In this context, the Board decided to keep the policy rate constant. The Committee is of the opinion that the monetary policy stance is sufficient to support the necessary recovery after the earthquake by maintaining price and financial stability. The effects of the earthquake in the first half of 2023 will be closely monitored.
In line with its main objective of price stability, the CBRT will resolutely continue to use all the tools at its disposal until strong indicators pointing to a permanent decline in inflation emerge and the medium-term 5 percent target is reached.