The Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee (PPK) reduced the one-week repo auction rate, which is the policy rate, by 100 basis points from 13 percent to 12 percent.
In the announcement made by the CBRT regarding interest rates, it was reported that the Board meeting under the chairmanship of Central Bank Governor Şahap Kavcıoğlu decided to reduce the policy rate from 13 percent to 12 percent.
In the announcement, it was stated that the weakening effect of geopolitical risks on economic activity around the world continues to increase and said, “Global growth forecasts for the upcoming period continue to be updated downwards and the assessments that recession is an inevitable risk factor are becoming widespread. Thanks to the strategic solution tools developed by Turkey, food is primarily Although the negative effects of supply constraints in some sectors, such as expressions were used.
Emphasizing that the effects of high global inflation on inflation expectations and international financial markets are closely monitored, the announcement stated:
“Developed country central banks emphasize that the rise in inflation may take longer than expected due to rising energy prices, supply-demand mismatch and rigidity in labor markets. It is observed that efforts to find solutions to uncertainties with new supportive practices and tools developed by central banks continue.
“The effectiveness of the monetary transmission mechanism will continue to be supported”
Reminding that strong growth was observed in the first half of the year, the announcement said, “Since the beginning of July, leading indicators point to a slowdown in growth due to the weakening foreign demand.” it was said.
In the announcement, it was stated that employment gains were more positive compared to similar economies, and the following evaluations were included:
“Especially when the sectors that contribute to the increase in employment are taken into account, it is seen that the growth dynamics are supported by structural gains. While the share of sustainable components in the composition of growth is increasing, the strong contribution of tourism to the current account balance, which exceeds expectations, continues. Besides, the high course of energy prices and the possibility of a recession in the main export markets continue. It keeps the risks on the balance alive. It is important for price stability that the current account balance becomes permanent at sustainable levels. The growth rate of loans and the meeting of the financing resources accessed with economic activity in accordance with its purpose are closely monitored. In addition, the policy-credit policy that has been opened significantly in the recent period “The balance reached by the interest rate cut with the contribution of the announced macroprudential measures is closely monitored. The Board will continue to strengthen its tools to support the effectiveness of the monetary transmission mechanism.”
“The policy framework review process continues”
In the MPC announcement, the rise observed in inflation; In addition to the delayed and indirect reflections of energy cost increases caused by geopolitical developments, pricing formations that are far from economic fundamentals and strong negative supply shocks caused by increases in global energy, food and agricultural commodity prices continue to be effective.
In the announcement, it was stated that the Board predicts that the disinflationary process will begin with the re-establishment of the global peace environment, together with the steps taken to strengthen sustainable price stability and financial stability.
In the announcement, it was stated that the leading indicators for the third quarter showed that the deceleration in economic activity continued due to the decreasing foreign demand.
“It is important that financial conditions are supportive in terms of maintaining the acceleration in industrial production and the increasing trend in employment at a time when uncertainties regarding global growth and geopolitical risks increase. In this context, the Board decided to reduce the policy rate by 100 basis points, and that the updated policy rate under the current outlook is sufficient. A comprehensive policy framework review process that encourages permanent and strengthened liraization in all policy instruments of the CBRT in order to institutionalize price stability in a sustainable manner is continuing. will continue to be used.”
“The CBRT will continue to use all the tools at its disposal within the framework of the liraization strategy”
In the announcement, it was emphasized that the CBRT will resolutely continue to use all the tools at its disposal within the framework of the liraization strategy, until strong indicators pointing to a permanent decline in inflation occur and the medium-term 5 percent target is achieved in line with the main objective of price stability.
In the announcement, it is stated that the stability to be achieved in the general level of prices will positively affect the macroeconomic stability and financial stability through the decrease in country risk premiums, the continuation of the upward trend in reverse currency substitution and foreign exchange reserves, and the permanent decrease in financing costs. It was noted that a suitable ground will be formed for the continuation of the way.
In the announcement, it was stated that the Board will continue to take its decisions in a transparent, predictable and data-oriented framework, and that the summary of the MPC meeting will be published within 5 working days.