Turkish Central Bank keeps policy rate stable at 9 percent

The Turkish Central Bank on Jan. 19 held its policy rate at 9
percent for s second month in its Monetary Policy Committee’s (MPC)
first meeting of the year, Trend reports citing Hurriyet Daily
News.

The bank has reduced interest rates by 500 basis points from
August to November.

“Although recently released data point to a stronger economic
activity than anticipated, recession concerns in developed
economies as a result of ongoing geopolitical risks and interest
rate hikes continue,” the bank said in a written statement after
the MPC meeting.

“While the negative consequences of supply constraints in some
sectors, particularly basic food, have been alleviated by the
strategic solutions facilitated by Türkiye, the high level in
producer and consumer inflation continues on an international
scale. The effects of high global inflation on inflation
expectations and international financial markets are closely
monitored,” it added.

Indicators for the last quarter of the year show that a slowdown
in growth due to the weakening foreign demand is compensated by the
relatively strong course in domestic demand, the bank noted.

“While share of sustainable components of economic growth
increases, the stronger than expected contribution of tourism
revenues to the current account balance continues throughout the
year,” read the statement.

“On the other hand, domestic consumption demand, high level of
energy prices and the likelihood of a recession in main trade
partners keep the risks on current account balance alive.”

The bank said it would continue to use all available instruments
decisively until strong indicators point to a permanent fall in
inflation and the medium-term 5 percent target is achieved.

“Level and underlying trend of inflation have been improved with
the support of the integrated policy approach implemented to
strengthen sustainable price stability and financial stability,”
said the bank.

“It is critically important that financial conditions remain
supportive for the sustainability of structural gains in supply and
investment capacity by preserving the growth momentum in industrial
production and the positive trend in employment. Accordingly, the
committee has decided to keep the policy rate unchanged.”