Breaking News: Central Bank announces April interest rate decision!

The Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee (MPC) met today (April 17) under the chairmanship of Fatih Karahan.

Following the meeting, which the markets were closely watching, the interest rate decision was announced.

SURPRISE FROM THE CENTRAL BANK!

The CBRT Monetary Policy Committee raised the policy rate by 350 basis points to 46 percent.

Expectations were that the interest rate would be kept constant at the 42.5 percent level.

The Committee also raised the Central Bank's overnight lending interest rate from 46 percent to 49 percent, and the overnight borrowing interest rate from 41 percent to 44.5 percent.

The following statements were made by the CBRT:

RISE EXPECTED IN MONTHLY INFLATION

"The underlying trend of inflation declined in March. It is projected that monthly core goods inflation will rise slightly in April due to the impact of developments in financial markets, while services inflation is expected to remain relatively flat. Leading indicators suggest that domestic demand, while losing momentum in the first quarter, is still running above projections and its disinflationary effect is diminishing. The potential effects of increasing protectionist trends in global trade on the disinflation process through global economic activity, commodity prices, and capital flows are being closely monitored. Inflation expectations and pricing behavior continue to be a risk factor for the disinflation process.

EMPHASIS ON TIGHT MONETARY POLICY

The determined stance in monetary policy strengthens the disinflation process through the rebalancing of domestic demand, real appreciation of the Turkish lira, and improvement in inflation expectations. Increased coordination with fiscal policy will also make a significant contribution to this process. The tight monetary policy stance will be maintained until a permanent decline in inflation and price stability are achieved. Accordingly, the policy rate will be determined in a way that provides the tightness required by the projected disinflation process, taking into account inflation realizations, the underlying trend, and expectations. The Committee will determine the steps to be taken regarding the policy rate with an inflation-focused, cautious, and meeting-based approach. The monetary policy stance will be tightened in case a significant and permanent deterioration in inflation is foreseen.

SIGNAL FOR ADDITIONAL STEPS

As a result of recent developments in financial markets, additional steps supporting the monetary transmission mechanism have been taken immediately. Liquidity conditions will continue to be closely monitored and liquidity management tools will continue to be used effectively."

LAST MPC MEETING

At the Central Bank's MPC meeting on March 6, the policy rate was lowered by 250 basis points, reducing the interest rate from 45 percent to 42.5 percent.

News Source: 12punto