Central Bank keeps policy rate unchanged

ANKARA

Türkiye’s Central Bank on March 23 kept its key policy rate unchanged after lowering it in February.

The bank kept its policy rate stable at 8.5 percent after cutting it by 50 basis points in February in order to support economic activity in the aftermath of the earthquakes that hit the south of the country.

The Central Bank said it will prioritize the creation of supportive financial conditions in order to minimize the effects of the earthquake and support the recovery.

“While level and underlying trend of inflation have been improved with the support of the implemented integrated policy approach, the effect of earthquake-driven supply-demand imbalances on inflation is closely monitored,” the bank said in a written statement following a Monetary Policy Committee (MPC) meeting.

“The Committee assessed that the current monetary policy stance is adequate to support the necessary recovery in the aftermath of the earthquake by maintaining price stability and financial stability. The effects of the earthquake in the first half of 2023 will be closely monitored,” it added.

The bank “will continue to use all available instruments decisively 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.”

“Stability in the general price level will foster macroeconomic stability and financial stability through the fall in country risk premium, continuation of the reversal in currency substitution and the upward trend in foreign exchange reserves, and durable decline in financing costs,” it said.

“This would create a viable foundation for investment, production and employment to continue growing in a healthy and sustainable way.”