In the announcement made by the CBRT regarding interest rates, it was stated that the Monetary Policy Committee (MPC), chaired by Central Bank Governor Hafize Gaye Erkan, decided to increase the policy rate to 17.5 percent.
The following statements were included in the announcement:
“Decided to continue the monetary tightening process”
The Board decided to continue the monetary tightening process in order to establish disinflation as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behavior.
While global inflation is falling, it still hovers above the long-term averages and the targets of central banks. For this reason, central banks in many countries of the world continue the monetary tightening process.
In our country, recent indicators point out that the main trend of inflation continues to rise. The strong course in domestic demand, cost-driven pressures stemming from wages and exchange rates, and the rigidity of services inflation are determinants of this development. In addition to these factors, the Committee anticipates that the deterioration in tax regulations and pricing behavior will have an additional negative impact on inflation.
With the support of foreign direct investments, significant improvement in external financing conditions, the continued increase in reserves and the support of tourism revenues, the balancing in the current account will contribute strongly to price stability.
“Indicators of inflation and the underlying trend of inflation will be closely monitored”
The policy rate will be determined in a way that will reduce the underlying trend of inflation and provide the monetary and financial conditions that will bring inflation to the 5 percent target in the medium term. Monetary tightening will be gradually strengthened as and when necessary until a significant improvement in the inflation outlook is achieved.
The Board is simplifying the existing micro- and macroprudential framework in a way that will increase the functionality of market mechanisms and strengthen macro financial stability. The simplification process will continue gradually, taking into account the impact analysis. In this context, the Board took decisions on selective credit and quantitative tightening to support the monetary tightening process, as well as interest rate hikes.
Indicators regarding inflation and the underlying trend of inflation will be closely monitored, and the Board will continue to use all instruments resolutely in line with its main objective of price stability.
The Board will continue to take its decisions in a predictable, data-oriented and transparent framework.