Turkish Central Bank Rate Cut
October 20, 2022
A bizarre tinge to this Thursday had been injected earlier by the Central Bank of Turkey whose officials slashed its one-week repo rate by 150 basis points to 10.5%. Seven reductions beginning in September 2021 add up to 850 basis points from a then-peak of 19.0%. Turkey’s easing monetary policy cuts against the global grain, and yet CPI inflation in Turkey had accelerated from 11.9% in September 2020 to 19.6% one year later when the central bank’s easing cycle started and subsequently soared to 83.5% by September 2022. A statement released by the Monetary Policy committee also pre-announced an additional and final one and a half percentage point rate cut to be likely taken at the next scheduled policy review and summarizes its coming policy framework:
It is critically important that financial conditions remain supportive to preserve the growth momentum in industrial production and the positive trend in employment in a period of increasing uncertainties regarding global growth as well as further escalation of geopolitical risks. Accordingly, the Committee has decided to reduce the policy rate by 150 basis points. The Committee evaluated taking a similar step in the following meeting and ending the rate cut cycle. To create an institutional basis for sustainable price stability, the comprehensive review of the policy framework continues with the aim of encouraging permanent and strengthened liraization in all policy tools of the CBRT.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Bank of Turkey
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