Central Bank to meet for rate decision this week

ISTANBUL

Members of the Central Bank’s monetary policy committee (MPC) will meet this week to decide about key interest rates.

The gathering scheduled for Sept. 20 will be the ninth MPC meeting in 2022.

Last month, the Central Bank surprised markets by cutting its policy one-week repo auction rate from 14 percent to 13 percent, which marked the first interest rate reduction since December 2021.

Economists expect the bank to keep the policy rate steady at 13 percent at this week’s meeting at a time when the annual inflation runs at 80 percent.

In the statement released after last month’s rate decision, the Central Bank warned that leading indicators for the third quarter point to some loss of momentum in economic activity.

The Turkish economy grew by 7.6 percent year-on-year in the second quarter of 2022, accelerating from 7.5 percent expansion in the January-March period.

The bank reiterated in the statement that it will continue to use all available instruments decisively within the framework of the 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.

Meanwhile, the bank’s regular survey of market participants for September showed that the annual consumer price inflation rate is expected to be 67.70 percent at the end of 2022, down from 70.6 percent in the previous survey.

Participants forecast that the monthly CPI will be 2.98 percent in September.

Expectations for the 12-month ahead inflation trimmed from 42 percent in the previous month’s survey to 36.7 percent.

Participants of the survey upgraded their GDP growth forecast for 2022 from 3.6 percent to 5 percent and for next year from 3.6 percent to 4.6 percent.

The MPC will hold two more meetings, in November and December, by the end of this year.