What to Expect from the CBRT's Interest Rate Meeting?

What to expect from the CBRT's interest rate meeting? Will the Central Bank of the Republic of Turkey raise interest rates at this meeting?

Economists are discussing the decision that will come out of this week's Monetary Policy Committee (MPC) meeting. While some think that the CBRT will keep the interest rate constant, others say that it will increase the interest rate by 100 basis points. Bloomberg HT Research Unit announced the interest survey for CBRT's February meeting. The median expectation of the institutions participating in the survey of Bloomberg HT was that the policy rate will be left unchanged at the February meeting. 5 out of 22 institutions participating in the survey shared their estimation that the policy rate will be increased by 100 basis points to 18 percent. The President of the Central Bank of the Republic of Turkey (CBRT) Naci Ağbal increased the interest rate by 4.75 points to 15 percent in the first meeting in November 2020, when he took office. In the second meeting of Ağbal in December, despite the expectation of a 1.5 point increase, the policy rate was increased by 2 points and reached 17 percent. While the CBRT kept the policy rate unchanged at 17 percent at its January meeting, it promised to maintain the tight stance. Recent messages from CBRT Governor Ağbal also showed signs that the tight monetary policy will continue for a long time. In an interview with Reuters, Ağbal used the following statements: “We are far from our medium-term inflation target of 5 percent. The estimates we have presented in the January Inflation Report show that we can achieve this target in 2023. Therefore, the tight and prudent monetary policy stance will be resolutely maintained until 2023, when the 5 percent target is expected to be reached.”     This article has contributions of Bloomberg HT.