2 days Ago
ISTANBUL The Turkish Central Bank on Thursday raised its policy rate by 350 basis points, despite market forecasts the rate would be left unchanged. The benchmark one-week repo rate was raised from 42.5% to 46%.
The bank said it is closely monitoring the potential effects of rising protectionism in global trade on the disinflation process through global economic activity, commodity prices, and capital flows. "Inflation expectations and pricing behavior continue to pose risks to the disinflation process," it added. The bank stated that tight monetary policy would remain in place until price stability is achieved through a sustained reduction in inflation.
"Accordingly, the policy rate will be determined in a way to ensure the tightness required by the projected disinflation path (while) taking into account realized and expected inflation, and the underlying trend," it said. The bank stressed that it would make cautious decisions on a meeting-by-meeting basis, with a primary focus on the inflation outlook. "Monetary policy tools will be used effectively in case a significant and persistent deterioration in inflation is foreseen," it noted.
Türkiye's annual inflation rate in March eased for the 10th consecutive month to 38.1%, its lowest reading since December 2021. From May 2023 until last March, the bank raised the rate from 8.
5% to 50% and then kept it constant until its meeting last December, when it lowered the rate 250 basis points to 47.5%. The bank cut the benchmark rate at its last three meetings from 47.
5% to 42.5%..
