The Central Bank of the Republic of Turkey (CBT) increased its policy rate by 200 basis points to 17 percent in December. A statement from the CBRT’s Monetary Policy Committee said, “The Monetary Policy Committee (Board of Directors) has decided to keep the policy rate at 17 percent for a weekly repo auction.”
The statement also said, “The balance between interest rate and actual / expected inflation in monetary policy will be resolutely maintained to maintain a strong disinflationary effect until a stable price target is reached and a strong price stability target is reached.” Monetary policy in this way will have a positive impact on macroeconomic and financial stability with price stability, reduction of risk premiums in the country, the introduction of reverse currency exchange, an increase in foreign exchange reserves and a steady decline. financing costs.
The CBRT said that domestic demand, which was strengthened by the cumulative effects of high credit growth during the epidemic, continued to have a negative impact on the current account balance, and that credit growth had recently begun to slow. tightening of financial conditions.
“Reasons that negatively affect inflation forecast”
The Central Bank also noted that the aggregate cost effects of domestic demand conditions, especially the exchange rate, rising international food and other commodity prices, and high inflation expectations continue to have a negative impact on price behavior and inflation prospects.
According to the statement, “a strong monetary policy stance will continue for a long time until the formation of strong indicators indicating a lasting decline in inflation and price stability, taking into account the forecast target by the end of 2021.” price behavior, diffusion indices, demand and cost factors, and inflation expectations are closely monitored within the forecast horizon. Additional money will be tightened if necessary. “
DHA / ET, TY
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