Limited decline in dollar following interest rate decision
In the Istanbul free market, the dollar opened the day at 32.5850 lira and the euro at 34.8980 lira. Following the Central Bank's decision to keep the policy rate steady at 50 percent, the dollar retreated to the 32.5347 level.
12punto
The CBRT Monetary Policy Committee has announced its first interest rate decision following the local elections.
The bank kept the one-week repo auction rate, which is the policy rate, steady at 50 percent.
LIMITED DECLINE EXPERIENCED
A limited decline was observed in the dollar/TL exchange rate following the Central Bank's interest rate decision.
The dollar, which started the day at 32.5850, retreated to 32.5347 lira. The euro, which started at 34.8980 lira, is at the 34.9792 level.
Yesterday, the selling price of the dollar was 32.5200 lira, and the selling price of the euro was 34.7910 lira.
The following statements were included in the announcement made by the Central Bank:
"The Monetary Policy Committee (the Committee) has decided to keep the one-week repo auction rate, which is the policy rate, steady at 50 percent. In March, the underlying trend of monthly inflation was higher than anticipated, despite the ongoing weakening. While the course of consumer goods and gold imports contributes to the improvement in the current account balance, other indicators for the near term point to the persistence of resilience in domestic demand.
The high level and stickiness of services inflation, inflation expectations, geopolitical risks, and food prices keep inflationary pressures alive. The Committee closely monitors the alignment of inflation expectations and pricing behavior with projections.
LEFT THE DOOR OPEN FOR ADDITIONAL RATE HIKES
Financial conditions have tightened significantly with the impact of the steps taken in March. The effects of monetary tightening on loans and domestic demand are being closely monitored. While the Committee has decided to keep the policy rate steady, taking into account the lagged effects of monetary tightening, it has reiterated its cautious stance against upside risks to inflation. The tight monetary policy stance will be maintained until a significant and permanent decline in the underlying trend of monthly inflation is achieved and inflation expectations converge to the projected forecast range.
In case of a significant and permanent deterioration in inflation, the monetary policy stance will be tightened. The decisive stance in monetary policy will reduce the underlying trend of monthly inflation through the rebalancing of domestic demand, real appreciation of the Turkish lira, and improvement in inflation expectations, and disinflation will be established in the second half of 2024.
LIQUIDITY DEVELOPMENTS WILL BE MONITORED
The Committee continues to implement macroprudential policies in a way that will protect the functionality of the market mechanism and macro-financial stability. In this context, if there are developments in credit growth and deposit rates outside of what is anticipated, the monetary transmission mechanism will continue to be supported.
Liquidity developments will be closely monitored, and sterilization tools will continue to be used effectively when necessary.
EMPHASIS ON THE 5 PERCENT INFLATION TARGET
The Committee will determine its policy decisions in a way that will provide the monetary and financial conditions that will reduce the underlying trend of inflation and reach the 5 percent target in the medium term, taking into account the lagged effects of monetary tightening.
Indicators regarding inflation and the underlying trend of inflation will be closely monitored, and the Committee will decisively use all tools at its disposal in line with its main objective of price stability. The Committee will make its decisions within a predictable, data-driven, and transparent framework."