Breaking News… Markets were waiting with anticipation: Central Bank announces April interest rate decision!

The Central Bank of the Republic of Türkiye (CBRT) Monetary Policy Committee (MPC) has announced the interest rate decision that markets were waiting for with anticipation.

The committee, convened under the chairmanship of CBRT Governor Fatih Karahan, kept the interest rate steady at 50 percent in April, in line with expectations.

In the meeting held last month, the policy rate had been increased by 500 basis points.

The following statements were included in the announcement made by the Central Bank:

"The Monetary Policy Committee (the Committee) has decided to keep the policy rate, which is the one-week repo auction rate, steady at 50 percent.

"INFLATIONARY PRESSURES REMAIN ALIVE"

In March, the underlying trend of monthly inflation, despite the ongoing weakening, was higher than anticipated. While the course of consumer goods and gold imports contributes to the improvement in the current account balance, other indicators regarding the recent period 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

With the impact of the steps taken in March, financial conditions have tightened significantly. The effects of monetary tightening on loans and domestic demand are being closely monitored. While the Committee decided to keep the policy rate steady, taking into account the lagged effects of monetary tightening, it reiterated its cautious stance against upside risks to inflation. The tight monetary policy stance will be maintained until a significant and sustained decline in the underlying trend of monthly inflation is achieved and inflation expectations converge to the projected forecast range. In the event of a significant and sustained 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 balancing 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, in case of developments in credit growth and deposit interest rates outside of expectations, 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."

News Source: 12punto