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The Central Bank of the Republic of Turkey (CBRT) has increased its weekly buyback rate. According to the statement made after the CBRT Monetary Policy Committee (MPC) meeting, the weekly buyback rate increased from 8.25% to 10.25%.
In the statement made after the meeting, the following was expressed:
“In the world economy, with the normalization measures taken by the countries, the uncertainties about the recovery are high, although there are signs of partial recovery in the third quarter. Developed and developing countries maintain their expansive monetary and financial stance. Effects are closely monitored.
“THE PARTIAL IMPROVEMENT OF TOURIST INCOME BEGAN”
With the gradual normalization steps of economic activity and the strong credit boost, a significant recovery is observed in the third quarter. Epidemics due to Turkey’s economic and monetary development implemented in the short term in order to limit the negative impact on fiscal measures, has contributed to financial stability and the recovery of economic activity by supporting the productive potential of the economy. Recently, the normalization trend observed in commercial loans also started in retail loans. The recovery of imports due to deferred demand and the liquidity and credit policies implemented in the area of epidemic measures is expected to be balanced by the gradual reduction of these policies. Despite the decline in tourism receipts due to the epidemic, a partial recovery began with the relaxation of travel restrictions. The recovery of exports of goods, relatively low levels of commodity prices and the real exchange rate will support the current account balance in the next period.
“INCREASE OF 2 POINTS DUE TO THE DEFLATION PROCESS AND PRICE STABILITY”
Supply-side factors related to the epidemic, which had an effect on inflation, were predicted to gradually disappear in the normalization process, and disinflationary effects on the demand-side would become more pronounced.
However, as a result of the rapid recovery achieved in the economy with a strong credit boost and the evolution of financial markets, inflation followed a higher course than expected. It was assessed that the tightening measures taken since August should be strengthened to control inflation expectations and limit the risks to inflation prospects. Consequently, the Board decided to increase the policy rate by 200 basis points to restore the disinflation process and support price stability.
“WARNING THE STAY WILL CONTINUE”
The Committee considers that the continuity of the disinflation process is of great importance for the fall in the country’s risk premium, the fall in long-term interest rates and the strengthening of the recovery of the economy. The caution of monetary policy must be maintained so that the decrease in inflation occurs in line with the target trajectory. In this framework, the monetary orientation will be determined in such a way as to ensure the continuation of the fall in inflation, taking into account the indicators of the underlying trend. The Central Bank will continue to use all the tools at its disposal in accordance with the objectives of price stability and financial stability. “
CURRENCY DROPPED HARD
Following the rise in interest rates by the Central Bank, a serious fall in currencies began.
The dollar / TL retreated from 7.71 to 7.57 and the euro / TL to 8.83 over 8.95.
HOW WAS BORSA ISTANBUL AFFECTED AFTER THE DECISION?
Following the Central Bank’s interest rate decision, Borsa Istanbul increased its profits. The BIST 100 index rose from 1.102 to 1.110 points in minutes. At 2:15 p.m., the BIST 100 index was trading at 1,110.36 points with a premium of 0.71 percent.
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