Breaking News: CBRT Raised its Interest Rate Decision

Breaking News: CBRT Raised its Interest Rate Decision Breaking News: CBRT raised its interest rate decision. According to the last minute information, the Central Bank increased the policy rate by 200 points to 17 percent. Central Bank of the Republic of Turkey, held the last meetings on interest rate decision of 2020. According to the last minute statement, the weekly repo rate was increased by 200 basis points from 15 percent to 17 percent. Economists' expectation was to raise the policy rate by 150 basis points to 16.50 percent. CBRT has decided to increase the interest rate by 675 points in two meetings. With the meeting held today, the increase decision taken in 3 meetings increased to 875 base points in total. In the Central Bank Expectations Survey, the inflation expectation is at the level of 14.18 percent for the end of the year, 10.84 percent for the next 12 months and 9.24 percent for the next 24 months. The Central Bank's inflation expectation is at the level of 9.4 percent for the end of 2021. The end consumer prices announced by TURKSTAT were recorded as 14.03 percent.   Following the meeting held today, the following statements were made: “Data on the global economy indicates that the partial recovery that started in the third quarter continues. However, despite the positive developments regarding the vaccine, uncertainties regarding the global economy continues due to the increase in Covid-19 cases. National income data and indicators for the last quarter points to a strong course in economic activity. However, the restrictions imposed due to the increasing number of cases creates uncertainty regarding the short-term outlook of economic activity, especially in the services sector. On the other hand, domestic demand, strengthened by the cumulative effects of high loan growth during the epidemic period, increases the current account deficit.   Monetary Tightening Decision Was Taken Domestic demand conditions, cumulative cost effects, especially the exchange rate, the rise in international food and other commodity prices and the deterioration in inflation expectations continue to adversely affect pricing behavior and inflation outlook. Accordingly, the Committee has decided to make a strong monetary tightening, taking into account the 2021 year-end forecast target, in order to eliminate the risks regarding the inflation outlook, to control inflation expectations and to restore the disinflation process as soon as possible. In the upcoming period, the tight monetary stance will be resolutely maintained, taking into account all factors affecting inflation, until strong indicators are formed that point to a permanent decline in inflation and price stability. It is evaluated that the permanent establishment of a low inflation environment will positively affect macroeconomic and financial stability through the decrease in country risk premiums, the initiation of reverse currency substitution, an increasing trend in foreign exchange reserves and a permanent decline in financing costs. The CBRT adopts an analysis framework based on all factors affecting inflation and their interaction with a medium-term perspective in its decision-making processes. It should be emphasized that any new data and news to be announced may cause the Board to change its policy stance for the future. “   How Did the Rate Increase Affect the Dollar? After the CBRT announced its interest rate hike, the dollar rate fell by 0.08 TL. The US dollar, which was at the level of 7.65 before the decision, declined to 7.57 after the Central Bank announced that it increased the policy rate by 200 basis points. The rate is currently trading at 7.59. The First Meeting of the CBRt 2021 will be held at the end of January