The Central Bank of the Republic of Turkey (CBRT), Monetary Policy Committee convened today under the chairmanship of Şahap Kavcıoğlu. In the statement made after the meeting regarding the interest rate decision in November, the Monetary Policy Committee decided to reduce the one-week repo auction rate, which is the policy rate, from 16 percent to 15 percent. ” it was said.
The following statements were made by the Central Bank:
“The Monetary Policy Committee (the Committee) has decided to reduce the one-week repo auction rate, which is the policy rate, from 16 percent to 15 percent.
Despite the recovery in global economic activity in the first half of the year and the increase in vaccination rates, new variants in the epidemic keep downside risks on global economic activity alive. The recovery in global demand, the high course of commodity prices, supply constraints in some sectors and the increase in transportation costs lead to an increase in producer and consumer prices on an international scale. The negative effects of the climatic conditions experienced in the main agricultural commodity exporting countries on global food prices are observed. While the effects of high global inflation on inflation expectations and international financial markets are closely monitored, central banks of developed countries consider that the rise in inflation may take longer than expected due to rising energy prices and supply-demand mismatch. In this context, central banks of developed countries maintain their supportive monetary stances and continue their asset purchase programs.
Leading indicators point to a strong course of domestic economic activity also driven by foreign demand. The spread of vaccination throughout the society allows the services, tourism and related sectors that were negatively affected by the epidemic to revive and economic activity to be maintained with a more balanced composition. While the demand for durable goods slows down, the recovery in non-durable goods continues. With the strong upward trend in exports, the improvement in the annualized current account balance is expected to continue in the rest of the year, and it is important for the price stability target that this trend continues.
In the recent rise in inflation; Supply-side factors such as increases in import prices, especially in food and energy, and disruptions in supply processes, increases in administered/directed prices and demand developments are influential. The positive effects of the revision in the monetary policy stance on commercial loans began to be seen. In addition, developments regarding individual loans are followed closely. The Committee evaluated the analyzes on the decomposition of demand factors that can be affected by monetary policy, core inflation developments and the effects of supply shocks, and decided to reduce the policy rate by 100 basis points to 15 percent. The Committee expects the temporary effects of supply-side factors outside the influence of monetary policy on price increases to continue throughout the first half of 2022. The Board will consider completing the use of the limited space implied by these impacts in December.
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 achieved. The stability to be achieved in the general level of prices will positively affect macroeconomic stability and financial stability through the decrease in country risk premiums, the continuation of reverse currency substitution and the upward trend in foreign exchange reserves, and the permanent decline in financing costs. Thus, a suitable ground will be created for the continuation of investment, production and employment growth in a healthy and sustainable way.
The Board will continue to take its decisions in a transparent, predictable and data-oriented framework. The Monetary Policy Committee Meeting Summary will be published within five working days.”
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