250-Basis Point Turkish Central Bank Rate Hike Matches Expectations
December 21, 2023
In Turkey where CPI and PPI inflation last month stood at 62.0% and 42.3%, the one-week repo rate was lifted after the December monthly review of monetary policy by an additional 250 basis points to 42.5%. The Central Bank of Turkey‘s benchmark rate had fallen from 19.0% to 8.5% between September 2021 and February of this year, precipitating a massive depreciation of the lira and sharp rise in inflation. The logic behind that ill-fated economic program was scrapped last spring, and seven interest rate hikes have totaled 34 percentages points. Today’s statement from the central bank observes that the cycle of rate tightening is mostly over, but there is no indication yet when rates might actually be lowered.
Assessing that monetary tightness is significantly close to the level required to establish the disinflation course, the Committee reduced the pace of monetary tightening. Taking into account the cumulative and lagged effects of monetary tightening, the Committee will continue to determine its policy decisions in a way that will create monetary and financial conditions necessary to ensure a decline in the underlying trend of inflation and to reach the 5 percent inflation target in the medium term.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Bank of Turkey
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