The Central Bank's interest rate decision has been announced. June 2023 CBRT meeting was chaired by Hafize Gaye Erkan. After the Central Bank meeting, the question 'Has the Central Bank interest rate decision been announced, what happened?' was answered. The Central Bank increased the policy rate by 650 basis points to 15 percent. This rate hike was the first since March 2021. On the other hand, the Central Bank has also published the text of the interest rate decision that will guide the markets. Economists drew attention to the importance of the text of the decision, as well as the CBRT's interest rate decision.
The Monetary Policy Committee (Committee) has decided to increase the one-week repo auction rate, which is the policy rate, from 8,5 percent to 15 percent.
The Board decided to start 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 inflation in the global economy is declining, it is still well above the long-term averages. For this reason, central banks all over the world take measures to reduce inflation.
In our country, recent indicators point to an increase in the underlying trend of inflation. This development was driven by the strong course of domestic demand, cost-side pressures and the rigidity of services inflation. In addition to these factors, the Committee anticipates that the deterioration in pricing behavior will have an additional negative impact on inflation.
The Committee will determine the policy rate in a way that will create the monetary and financial conditions that will ensure the underlying trend of inflation to decline and reach 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. Indicators of inflation and the trend of inflation will be closely monitored, and the CBRT will continue to resolutely use all the tools at its disposal in line with its main objective of price stability.
The effectiveness of monetary policy will increase with the start of the monetary tightening process. However, with the aim of ensuring the continuity of price stability, the CBRT will continue to support strategic investments that will improve the current account balance.
The Board will simplify the existing micro- and macroprudential framework to increase the functionality of market mechanisms and strengthen macro financial stability. The simplification process will be gradual by performing impact analysis.
The Board will continue to take its decisions in a predictable, data-oriented and transparent framework.