Business circles welcome rate hike decision

ISTANBUL

Leaders of business associations have welcomed the Central Bank’s move to hike its policy rate sharply by 650 basis points, calling it a step taken toward ensuring price and financial stability.

The Central Bank on June 22 increased its one-week repo auction rate from 8.5 percent to 15 percent. This has been the first rake hike since March 2021.

Şekib Avdagiç, the president of the Istanbul Chamber of Commerce (İTO), described the rake hike as “reasonable and normal.” He called on lenders not to tighten the noose on credits to companies.

“Production, employment and exports are as important as interest rates, exchange rates and inflation. We cannot compromise on those,” Avdagiç said.

The Central Bank’s rate hike is a step taken toward ensuring financial stability, commented Erdal Bahçıvan, the president of the Ankara Chamber of Industry (ASO).

“We view the rate decision as a strong message that the fight against inflation will continue with determination,” Bahçıvan said.

Even though the rate hike was smaller than the markets had expected, the Central Bank sent out a powerful message, according to Gürkan Yıldırım, the president of the Young Businesspeople Association of Türkiye (TÜGİAD).

Echoing Avdagiç, Yıldırım said that banks should provide more loans to companies.

In his remarks on Twitter after the bank announced its rate decision, Treasury and Finance Minister Mehmet Şimşek said the economic policies to be implemented in the period ahead will be shaped by keeping the focus on stability, trust and sustainability.

The government’s economic philosophy is based on the principles of the market economy, floating exchange rate system, and inflation targeting model, Şimşek said.

“The bank’s [rate] decision should be evaluated within this framework,” he added.