The Central Bank of the Republic of Turkey took the second interest rate hike decision in the new period.
CBRT increased the policy rate from 15 percent to 17.50 percent.
The expectation of the institutions participating in the surveys was to increase the interest rate to 20 percent.
The following statements were used in the decision text:
The Committee decided to continue the monetary tightening process in order to establish disinflation as soon as possible, anchor inflation expectations and contain the deterioration in pricing.
While global inflation is falling, it is still above long-term averages and central banks' targets. Therefore, central banks in many countries around the world continue to tighten monetary policy.
In Turkey, recent indicators point to a continued rise in the underlying trend of inflation. In addition to these factors, the Committee anticipates that tax adjustments and the deterioration in pricing behavior will have an additional adverse impact on inflation.
The rebalancing in the current account, supported by foreign direct investments, the marked improvement in external financing conditions, the ongoing increase in reserves and tourism revenues, will contribute strongly to price stability.
The policy rate will be set so as to provide the monetary and financial conditions to reduce the underlying trend of inflation and bring inflation to the 5 percent target in the medium term. Monetary tightening will be gradually strengthened when and to the extent necessary until the inflation outlook improves significantly.
The Committee is simplifying the existing micro- and macroprudential framework in a way to enhance the functionality of market mechanisms and strengthen macro financial stability. The simplification process will continue gradually, taking into account the impact analysis. In this context, in addition to the rate hike, the Committee took selective credit and quantitative tightening decisions to support the monetary tightening process.
Indicators for inflation and underlying inflation will be closely monitored and the Committee will continue to use all available tools decisively in line with the main objective of price stability.
The Committee will continue to take its decisions in a predictable, data-driven and transparent framework.