The Central Bank of the Republic of Turkey (CBRT) reduced the one-week repo rate, which is the policy rate, by 50 basis points to 8.50%.
The median expectation of institutions participating in the Bloomberg HT survey was that the policy rate would be cut by 100 basis points to 8%.
In the statement of the Monetary Policy Committee on the decision, it was stated that “The Committee is of the opinion that this measured monetary policy stance after the reduction is sufficient to support the necessary recovery after the earthquake by maintaining price stability and financial stability.”
In the text called “The effects of the earthquake in the first half of 2023 will be closely monitored”, the text states that “With the support of the holistic policies implemented, improvements in the level and trend of inflation have started to be seen, but the effects of supply-demand imbalances caused by the earthquake on inflation are closely monitored. It has become even more important that financial conditions are supportive in terms of sustaining the acceleration in industrial production and the increasing trend in employment. ” were included.
The CBRT announced that it expects the earthquake to affect economic activity in the near term, but it does not foresee a permanent effect on the performance of the Turkish economy in the medium term.
İş Portfolio Deputy General Manager Nilüfer Sezgin and Boğaziçi University Faculty Member Prof. Dr. Burak Saltoğlu evaluated the CBRT’s interest rate decision.
Nilüfer Sezgin, Deputy General Manager of İş Portföy, said about the CBRT’s 50 basis point rate cut, “I think it is positive from an inflation point of view that the rate cut is not as expected.” used the phrases. Stating that the developments in the earthquake had the potential to create short-term volatility in inflation by affecting supply conditions, Sezgin said that the CBRT made a reference to this in the MPC text.
Boğaziçi University Faculty Member Prof. Dr. Commenting on the paragraph added on the earthquake in the MPC text, Burak Saltoğlu said, “The CBRT says something about the measures it will take and that it may switch to a different monetary policy process. Despite this, it sends the message that inflation is not out of focus with its 50 basis points reduction.” said.