Central Bank announced its interest rate decision
The Central Bank Monetary Policy Committee (PPK) convened today for the first time under the chairmanship of Naci Ağbal. Contrary to what was expected, the MPC did not increase interest rates last month.
CENTRAL DECISION ON INTEREST INCREASE
The Central Bank raised the interest rate by 4.75 points at this month's meeting. Policy interest increased from 10.25 to 15.
DOLLARS, EURO AND GOLD DOWN AFTER INTEREST DECISION
With the interest rate increase parallel to the expectations from the Central Bank, the Turkish Lira gained value against the dollar and euro. As the first reaction, the dollar / TL fell to the level of 7.50, while the Euro / TL saw gold of 9 lira. The gram of gold fell to 450 TL
Just before the decision, the dollar / TL was above 7.69 while the euro / TL was at the level of 9.10.
BORSA ISTANBUL LOSSES BACK
Borsa Istanbul BIST 100 Index was down about 1 percent with risk aversion sales following the opening. After the interest rate hike in line with expectations, BIST 100 Index returned some of its losses
Here is the statement from the Central Bank;
To increase the one-week repo auction interest rate, which is the policy rate, from 10.25 percent to 15 percent
It has decided that all funding will be made at the one-week repo rate, which is the main policy tool.
Global economy recovered partially in the third quarter. However, due to the recent increase in Covid-19 cases, uncertainties regarding the global economy have increased in the upcoming period.
Recovery in economic activity continues. Partial restrictions imposed by the increasing number of cases increase the uncertainty regarding the short-term outlook of economic activity, particularly in the services sector. On the other hand, domestic demand, which increased with the lagged effects of the strong credit momentum during the epidemic period, negatively affects the current account balance through the import channel.
The lagged effects of the depreciation of the Turkish lira, the rise in international food prices and the deterioration in inflation expectations adversely affect the inflation outlook. Although the data monitored for November point to a recent increase in inflation due to exchange rate volatility, this increase is considered to be temporary with the determined stance in monetary policy. Accordingly, the Board decided to make a clear and strong monetary tightening in order to eliminate the risks regarding the inflation outlook, to control inflation expectations and to restore the disinflation process as soon as possible.
INFLATION MESSAGE FROM THE CENTRAL BANK
In the upcoming period, the tight monetary stance will be continued with determination, taking into account all factors affecting inflation, until a permanent decrease in inflation is achieved.
The permanent establishment of a low inflation environment, country risk premiums decreased, dollarization trend reversed, foreign exchange reserves increased and financing costs increased.