Central Bank Reduces Interest Rates for the Sixth Time in a Row

* Photo: Anadolu Agency (AA)

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The Central Bank of the Republic of Turkey (TCMB) Monetary Policy Committee convened today (February 19) and has reduced the one-week repo auction rate (policy rate) from 11.25 percent to 10.75 percent.

Chaired by Central Bank Chair Murat Uysal, the Monetary Policy Committee has released a written statement after their meeting and announced the interest rate cut briefly as follows:

'Recovery continues, inflation closely monitored'

"Recent data indicate that recovery in economic activity continues. Sectoral diffusion of economic activity continues to improve.

"Despite signs of recovery, investment and employment remain weak. While favorable effects of improved competitiveness prevail, weakening global economic outlook tempers external demand.

"As the contribution of net exports to economic growth declines, economic recovery is expected to be sustained with the help of the ongoing disinflation process and improvement in financial conditions.

"Nevertheless, developments in credit growth and its composition are closely monitored for their impact on external balance and inflation.

'We decided to make a more measured cut'

"On the other hand, recently elevated uncertainties regarding global economic outlook lead to volatility in the demand for emerging market assets and the risk appetite.

"Rising protectionism, uncertainty regarding global economic policies, geopolitical developments and the recent outbreak of an epidemic disease are closely monitored for their impact on capital flows, international trade and commodity prices.

"Accordingly, considering all factors affecting the inflation outlook, the Committee decided to make a more measured cut in the policy rate. At this point, the current monetary policy stance remains consistent with the projected disinflation path."

Sixth interest rate cut in a row

The Central Bank's recent interest rate cut has marked the sixth interest rate in a row. After Central Bank Governor Murat Çetinkaya was removed from office and Murat Uysal was appointed in his place, the Monetary Policy Committee took its first decision of interest rate cut in July and cut the policy rate from its former level of 24 percent to 19.75 percent.

After its meeting on September 12, 2019, the Monetary Policy Committee of the Central Bank lowered the policy rate to 16.50 percent.The Committee reduced the interest rate to 14 percent on October 24, to 12 percent on December 12 and to 11.25 percent on January 16. (HA/SD)