The Central Bank cut the one-week repo rate (policy rate) by 50 basis points from 8.75 percent to 8.25 percent.
Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee (MPC), the one-week repo auction rate (policy rate) pulled to 8.25 percent from 8.75 percent by 50 basis points.
In the announcement made by the CBRT on interest rates, it was reported that the MPC, convened under the chairmanship of Central Bank Governor Murat Uysal, decided to lower the policy rate from 8.75 percent to 8.25 percent.
In the announcement, it was stated that the weakening in the global growth outlook is deepening due to the developments regarding the new type of coronavirus (Kovid-19) epidemic, and the central banks of developed and developing countries continue to take expansionary steps.
While the uncertainties regarding the recovery in the global economy were high and the normalization steps taken by the countries were followed, the announcement stated that the global effects of the epidemic caused by capital flows, financial conditions, foreign trade and commodity prices were closely monitored.
In the announcement, the following were recorded:
“Economic activity, which showed a strong trend in January and February with the contribution of the improvement in financial conditions, started to weaken as of mid-March due to the effects of the coronavirus epidemic on foreign trade, tourism and domestic demand. The slowdown in economic activity became evident in April, while the first half of May was high frequency indicators comprise the bottom of the turn signals with partial normalization steps. epidemics due to the development of Turkey’s economy the financial markets in terms of limiting the adverse effects on the credit channel and firms is of continued importance of healthy functioning of the cash flow. in this framework, implemented in the near term monetary and fiscal measures It is considered that it will contribute to financial stability and post-epidemic recovery by supporting the production potential of the economy. The current account balance is expected to follow a moderate course throughout the year due to the restrictive effect of tia prices and imports. “
“The monetary stance will be determined to ensure the continuity of the decline in inflation”
In the announcement, it was stated that the trends of core inflation indicators were moderate, depending on the developments in inflation expectations and domestic demand conditions.
In the announcement, which emphasized that despite the depreciation of the Turkish lira in parallel with global developments, international commodity prices, especially crude oil and metal prices, positively affected the inflation outlook, it was noted that although the unit cost increases due to the decrease in production and sales were followed, it was noted that the effect of aggregate demand conditions to restrain inflation increased.
The announcement included the following statements:
“It is considered that consumer inflation may remain somewhat high in the short term due to the seasonal and epidemic-related effects on food prices, but demand-side disinflationary effects will become more pronounced in the second half of the year. Under the current monetary policy stance, the inflation outlook is considered to be in line with the year-end forecast.The Committee considers that the continuity of the disinflation process is of great importance for the decline in the country’s risk premium, the fall in long-term interest rates and the strengthening of the recovery in the economy. The cautious stance in monetary policy must be maintained in order for the monetary policy to be harmoniously realized. will be determined in clay. The Central Bank will continue to use all the tools it has in line with the objectives of price stability and financial stability. “
In the announcement, it was emphasized that any new data and news to be announced may cause the board to change its policy stance for the future, and it was stated that the Monetary Policy Committee Meeting Summary will be published within five working days.