CBRT Kept The Policy Rate Unchanged

CBRT kept the policy rate unchanged. The bank kept the interest rate constant at 19 percent.

Today, it was stated that the Monetary Policy Committee (MPC) convening under the chairmanship of Central Bank Governor Şahap Kavcıoğlu decided to keep the policy rate constant at 19 percent. In the statement made by the Central Bank of the Republic of Turkey (CBRT), it was emphasized that the global economy, which contracted sharply last year due to the epidemic, continues to recover with the effect of supportive policies and the positive developments in the vaccination process, and used expressions that the acceleration in manufacturing industry activity and global trade is determinant in this recovery process. In the statement that the upward trend in commodity prices slowed down, it was noted that the effects of rising global inflation expectations on international financial markets remained important. In the statement, which stated that despite the restrictive effects of the epidemic, domestic economic activity was strong due to domestic and foreign demand, the following was stated; “While the manufacturing industry activity exhibits a strong acceleration, the weak course continues in the service sectors adversely affected by the epidemic restrictions. There are risks in both directions. Despite the increase in exports and the decline in gold imports, strong domestic demand and commodity prices continue to affect the current account balance negatively. Commercial loans have a moderate course, and despite the tightening in financial conditions, there is an upward trend in retail loan growth.”

Tight Monetary Stance Will Be Preserved

It was stated that demand and cost factors, supply constraints in some sectors and high levels of inflation expectations continue to pose risks on pricing behavior and inflation outlook. In the continuation of the statement, the following was recorded: “The slowing effects of the current monetary stance on loans and domestic demand are expected to become evident in the upcoming period. Accordingly, the Committee has decided to maintain the tight monetary stance by keeping the policy rate constant. The CBRT will continue to use all the tools it has in line with the main objective of price stability. The policy rate will continue to be set at a level above inflation, maintaining a strong disinflationary effect, until strong indicators are formed and the medium-term target of 5 percent is reached. It will positively affect the macroeconomic stability and financial stability through the investment, production and employment increase in a healthy and sustainable manner.” It was informed that the summary of the MPC meeting will be published within 5 work days.