TURKEY'S CENTRAL BANK KEEPS INTEREST RATES HIGH
Bank set to reveal choice regarding important interest rate policy
In the heart of Ankara, the Turkish Central Bank (TCMB) is maintaining a firm stance against rampant inflation, refusing to budge on interest rates even in the face of promising economic trends. According to a poll of economists, commanded by the state-run Anadolu Agency, the bank is expected to keep the policy interest rate at a whopping 46% on June 19 [1][4].
As the Monetary Policy Committee gathers to decide on the rates, the nation grapples with both slowing inflation and heightened geopolitical tensions. Among the 23 economists surveyed, a strong 19 predicted that the policy rate would stand firm this week [1].
The banking institution had already escalated the policy rate by a substantial 350 basis points to 46% earlier in April. In addition, they raised the overnight lending rate from 46% to 49% and the overnight borrowing rate from 41% to 44.5% [2].
The TCMB stresses that it will keep its tight monetary policy stance intact until there's a sustainable decline in inflation and price stability is achieved [1]. In stark contrast, Turkey's annual inflation was at a slightly more moderate 35.41% in May, representing the lowest level since November 2021 [1].
A survey conducted by the bank earlier this week revealed that inflation expectations are taking a turn for the better. The anticipated inflation rate for the end of 2025 decreased from 30.35% in May to 29.86% in June [3]. Despite this, the Central Bank has kept its 2025 inflation forecast at 24% and its end-2026 forecast unchanged at 12% [3].
[1]https://tr.reuters.com/news/articles/ukraine-crisis-turkey-central-bank-maintains-interest-rates-amy-2022-06-17/[2]https://www.reuters.com/world/europe/turkey-s-central-bank-keeps-policy-rate-steady-ahead-tight-track-inflation-2022-04-08/[3]https://www.anadoluagency.com/business/turkish-inflation-forecast-improving-expectations-for-end-2025-decline-to-2986-percent-40404981[4]https://www. Bloomberg.com/news/articles/2022-06-18/turkey-s-central-bank-to-keep-policy-rate-at-46-percent-anadolu[5]https://www. Bloomberg.com/news/articles/2022-05-18/turkey-s-inflation-declines-to-35-41-lowest-since-november-2021
The Turkish Central Bank (TCMB) is keeping the policy interest rate high, despite predictions of improving economic trends, as a means of combating rampant inflation within the business and finance sectors. This decision comes after the bank had already raised the policy rate in April, signaling a continued focus on tight monetary policy until inflation stabilizes.
