The Central Bank of the Republic of Turkey (CBRT) increased the interest rate for August 2023, which investors were eagerly waiting for, to 25 percent.
Treasure And Finance Minister Mehmet LightningAnd CBT head memory Purpose Erkan It was decided to tighten the policy interest rate and to increase the interest rate in the economic process carried out with the accompanying economy. In the midst of these processes, the CBRT increased the last two policy rates. While the interest rate expectation for August was 20 percent, the announced interest rate decision was 25 percent.
CBRT chose an increase in its August 2023 interest rate decision
The interest rate decision, which the markets focused and eagerly awaited, was announced. The Central Bank of the Republic of Turkey (CBRT) has decided on the August policy rate of 25 percent.
Previously, the CBRT decided to initiate monetary tightening. In this context, it was observed that interest rates rose from 8.5 percent to 17.5 percent. Markets and expectations were to raise the policy rate to 20 percent with the decision announced today.
The CBRT made a breakthrough above the expectations and cut the policy rate from 17.5 percent to 25 percent. With this strong increase, it is a matter of curiosity what kind of process will follow the markets.
The Monetary Policy Committee said the following about its decision on the policy rate;
The Monetary Policy Committee (Committee) decided to increase the one-week repo auction rate, which is the policy rate, from 17.5 percent to 25 percent.
The Board decided to continue the monetary tightening process in order to establish disinflation as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behavior.
Recent indicators point out that the underlying trend of inflation continues to rise. The strong course of domestic demand, cost pressures stemming from wages and exchange rates, rigidity in services inflation and tax regulations are determinants of this development. In addition to these factors, the deterioration in inflation expectations and pricing behavior more than anticipated due to the rise in fuel prices indicates that inflation will remain close to the upper limit of the forecast range in the Inflation Report (Report) at the end of the year. However, the Board anticipates that disinflation will be established in 2024 in line with the Report, with the effect of monetary tightening steps.
