The Central Bank of the Republic of Türkiye (CBRT) left the policy rate constant at 37 percent as expected. The CBRT MPC board drew attention to geopolitical uncertainties.
On the other hand, overnight lending and borrowing interest rates were kept constant. While it was stated in the text that inflation remained close to horizontal in February, it was emphasized that uncertainties increased as a result of geopolitical developments. It was stated that the impact of geopolitical developments on the inflation outlook is closely monitored.
The CBRT Monetary Policy Committee text is as follows;
“The Monetary Policy Committee (Board) decided to keep the one-week repo auction interest rate, which is the policy rate, constant at 37 percent. The Board also kept the Central Bank’s overnight lending interest rate at 40 percent and its overnight borrowing interest rate at 35.5 percent.
The main trend of inflation remained close to horizontal in February. While uncertainties increased as a result of geopolitical developments, a deterioration in global risk appetite and an increase in energy prices were observed. In order to limit the risks that these factors may pose to the inflation outlook, decisions supporting the tight monetary policy and coordinated fiscal measures have been taken. The effects of geopolitical developments on the inflation outlook through the cost channel and economic activity are closely monitored.
The tight monetary policy stance that will be maintained until price stability is achieved will strengthen the disinflation process through demand, exchange rate and expectation channels. The steps to be taken by the Board regarding the policy rate; It will determine inflation realizations, taking into account its main trend and expectations, in line with the intermediate targets and in a way that ensures the stringency required by disinflation. Monetary policy decisions are taken with an inflation outlook-focused, meeting-based and cautious approach. With the influence of recent developments, in case of a significant and permanent deterioration in the inflation outlook, the monetary policy stance will be tightened.
In case of unforeseen developments in the credit and deposit markets, the monetary transmission mechanism will be supported by additional macroprudential steps. Liquidity conditions will continue to be closely monitored and liquidity management tools will continue to be used effectively.
The Board will determine policy decisions to ensure monetary and financial conditions that will enable inflation to reach the 5 percent target in the medium term. The Board will make its decisions in a predictable, data-driven and transparent framework.
“The Monetary Policy Committee Meeting Summary will be published within five business days.”
