CBRT Published The Summary of Monetary Policy Meeting

CBRT published the summary of the MPC meeting. The bank pointed out the importance of interest in the summary of the meeting.

The Central Bank of the Republic of Turkey (CBRT) published the summary of the Monetary Policy Committee meeting in February 25. In the summary of the meeting, where the policy rate was kept constant at 17 percent and the tight stance was maintained, the bank pointed out that the interest rate was the most important tool that determines the policy. In summary, it was noted that the balance between monetary policy interest rate and actual/expected inflation will be resolutely maintained in a way that preserves the strong disinflationary effect, until it reaches a permanent price stability and 5 percent target. In the summary announced by the CBRT, the following statements were made: "It has been evaluated that maintaining the tight monetary policy stance in this way will positively affect macroeconomic and financial stability through the decrease in country risk premiums, the start of reverse currency substitution, the trend of increasing foreign currency reserves and permanent decline in financing costs, as well as establishing price stability permanently.”   Emphasis On The Required Reserve Was Made The subject of required reserves was emphasized in the CBRT meeting summaries. In the summary, which indicates a slight decline in loan and deposit rates in the recent period, it was noted that there is a need for an increase in Turkish lira required reserves in order to increase the effectiveness of the monetary transmission mechanism. The following expressions were used in the summary regarding the subject: "The effects of the monetary policy stance on the money markets have been scrutinized. There has been a slight decline in loan and deposit rates in the recent period. The Committee stated that there is a need for an increase in Turkish lira required reserves in order to increase the efficiency of the monetary transmission mechanism. The Board emphasized that the only tool used in determining the monetary stance is the policy rate, while required reserve rates are a tool that affects the transfer of the monetary stance determined by the policy rate to deposit, loan and other money markets." While it is stated that the CBRT's increase in required reserves by 200 basis points at each maturity divides the markets into two, institutions such as Goldman Sachs and MUFG noted that this step could be interpreted as the central bank could not tighten it with a normal rate hike. Ehsan Khoman, MUFG Emerging Markets Research Manager, said, "The reserve requirement decision to make the transmission mechanism more efficient is supportive of a tighter monetary policy."