The Central Bank (CBRT) raised its policy rate by 17 percentage points to 17 percent from 19 percent.
A statement issued after the meeting of the Central Bank’s Monetary Policy Committee said that “it has been decided to increase the one-week repo rate, which is the policy rate, from 17 percent to 19 percent.”
The statement said that “rising global inflation expectations have caused uncertainty about the monetary policy of developed countries and fluctuations in global financial markets,” and that economic activity is following a strong path. “Economic activity in the service and related sectors is expected to increase with the reduction of restrictions due to the epidemic,” and “risks in economic activity remain important, depending on possible developments related to the course of the epidemic.” . The statement said, “The increase in import prices and strong domestic demand continue to negatively affect the current balance due to the cumulative effects of the high credit growth achieved during the epidemic.”
A strong extra money stiffness will be made
The statement also drew attention to the risks associated with inflation. It was stated that cumulative cost effects, especially domestic demand conditions, exchange rate, increase in international food and other commodity prices and high inflation expectations continue to have a negative impact on price behavior and inflation outlook.
“The committee has decided to apply a strong pre-loaded monetary consolidation, given the high risks of these developments in relation to inflation expectations, price behavior and the medium-term inflation outlook,” he said.
He stressed that the strong monetary policy position will continue for a long time until the end of 2021, given the forecast target, a strong decline in inflation and strong indicators indicating price stability. Strong indicators indicating a lasting decline in inflation and price stability, indicators of trend and price behavior, diffusion indices, demand and cost factors, and inflation expectations will continue to be closely monitored within the forecast horizon. .
The statement said, “The balance between monetary policy interests and actual / expected inflation will be resolutely maintained until a stable price stability and a 5.0 percent target is reached.” It was stated that the reduction of risk premiums, the introduction of reverse currency exchange, the upward trend in foreign reserves and the steady decline in financing costs will have a positive impact on macroeconomic and financial stability.
DHA, DW / JD, TY
© Deutsche Welle Turkish