Turkish central bank raises interest rates to reinforce disinflation process
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Güneşli
13 oC
Güneşli
The Central Bank of the Republic of Türkiye (CBRT) has raised its policy rate from 42.5 percent to 46 percent, marking a significant move in its ongoing efforts to tackle inflation.
In addition, the bank announced an increase in the overnight lending rate from 46 percent to 49 percent and the overnight borrowing rate from 41 percent to 44.5 percent.
The Monetary Policy Committee emphasized that inflation showed signs of moderation in March, though core goods inflation is expected to rise slightly in April due to financial market fluctuations. Meanwhile, services inflation is likely to remain stable. Despite some slowdown in the first quarter, domestic demand remains higher than projected, reducing the overall disinflationary impact.
The Committee reiterated its commitment to a tight monetary stance, stating that this policy is crucial for reinforcing the disinflation process. Factors contributing to this strategy include a moderation in domestic demand, real appreciation of the Turkish lira, and improved inflation expectations. Additionally, greater coordination between fiscal and monetary policy is expected to support the ongoing stabilization efforts.
The bank reaffirmed that interest rate decisions will be made prudently, assessing inflation trends on a meeting-by-meeting basis. Monetary tightening will be intensified if a significant and persistent deterioration in inflation outlook emerges.
To enhance the monetary transmission mechanism, the bank has also implemented additional measures in response to recent financial market developments. Liquidity conditions will be closely monitored, with tools deployed to manage liquidity effectively.
The Committee aims to ensure that its policies create the necessary financial conditions for inflation to decline, with the ultimate goal of reaching the 5 percent inflation target in the medium term. All monetary policy tools will be used decisively, and decisions will be made within a data-driven and transparent framework.
A detailed summary of the Monetary Policy Committee meeting will be released within five working days. (ILKHA)
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