Central Bank keeps interest rate stable

ANKARA

In a widely expected mote, the Central Bank of Turkey has kept the its the policy rate – one-week repo rate- unchanged at 14 percent.

In December 2021, the bank slashed the key rate to 14 percent from 15 percent.

Disinflation process is expected to start on the back of measures taken and decisively pursued for sustainable price and financial stability along with the decline in inflation owing to the base effect, the bank said in a statement released of the Monetary Policy Committee (MPC) meeting on Feb. 17.

“Increase in inflation in the recent period has been driven by pricing formations that are not supported by economic fundamentals, supply side factors such as the rise in global energy, food and agricultural commodity prices, supply constraints, and demand developments.”

While cumulative impact of the recent policy decisions is being monitored, to create a foundation for sustainable price stability, the comprehensive review of the policy framework is being conducted with the aim of encouraging permanent liraization in all policy tools of the central bank, the statement added.

The bank stressed that it will continue to use all available instruments decisively within the framework of liraization strategy until strong indicators point to a permanent fall in inflation and the medium-term 5 percent target is achieved in pursuit of the primary objective of price stability.

Consumer prices increased by 11.1 percent on a a monhtly basis in January, bringing the annual inflation rate to 48.7 percent.

Level of capacity utilization and other leading indicators show that domestic economic activity remains strong, with the help of robust external demand, the bank also said.

While share of sustainable components of economic growth increases, current account balance is expected to post a surplus in 2022, it added.