CBRT takes reserve requirement step for additional tightening

As part of the Central Bank of the Republic of Turkey's (CBRT) additional tightening steps to support its tight monetary policy stance, a reserve requirement based on loan growth will be established.

The CBRT's Communiqué on Amendments to the Communiqué on Reserve Requirements has been published in the Official Gazette.

Accordingly, for the portion of loans determined by the Central Bank that exceeds the monthly growth rate of 2 percent, the reserve requirement in Turkish Lira will be held as blocked for a period of 1 year.

In its announcement regarding additional tightening steps, the CBRT had stated that, in order to increase the effectiveness of the practice regarding loan growth limits, work was ongoing to establish a reserve requirement based on loan growth in addition to the securities maintenance requirement.

In the announcement, it was reported that within the scope of the securities maintenance requirement based on loan growth, it was decided to reduce the monthly growth limit for TL commercial loans from 2.5 percent to 2 percent, to reduce the monthly growth limit for consumer loans from 3 percent to 2 percent, and to maintain the 2 percent limit for vehicle loans.

In the summary published regarding the CBRT Monetary Policy Committee's meeting on February 22, it was stated: "The monetary policy stance will be tightened in case a significant and persistent deterioration in the inflation outlook is foreseen. The monetary transmission mechanism will be supported in case of developments in loan growth and deposit interest rates outside of what is foreseen."

News Source: AA