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The Monetary Policy Committee of Turkey's Central Bank has once again decided to keep the policy rate (one-week repo auction rate) constant at 14 percent following its meeting today (March 17).
Chaired by Central Bank Governor Şahap Kavcıoğlu, the Monetary Policy Committee released a statement after its meeting. Referring to the recent increase in inflation and the Committee's "expectation for the disinflation process", the Bank has explained its decision briefly as follows:
"Increase in inflation in the recent period has been driven by rising energy costs resulting from the heightened regional conflict, temporary effects of pricing formations that are not supported by economic fundamentals, supply side factors such as the rise in global energy, food and agricultural commodity prices, supply constraints, and demand developments.
"The Committee expects the disinflation process to start on the back of measures taken and decisively pursued for sustainable price and financial stability along with the decline in inflation owing to the base effect and the resolution of the ongoing regional conflict. Accordingly, the Committee has decided to keep the policy rate unchanged."
The policy rate has been standing at 14 percent in Turkey since the meeting of the Monetary Policy Committee in December 2021.
Interest rate hike by Fed after 3 years
On the other side, the US Federal Reserve approved a 0.25 percentage point rate hike, the first increase since December 2018, yesterday.
As reported by Turkey's state-run Anadolu Agency (AA), the Fed's median federal funds rate projection was raised to 1.9 percent for the year 2022, which means that the central bank can hike rates by 25 basis points in each of its remaining six meetings this year.
TheUS Federal Reserve's median federal funds rate projection for the next year was raised to 2.8 percent from the previous level of 1.6 percent made in December. This means that the central bank can make an additional three rate hikes of 25 basis points each next year.
It does not, however, indicate any more rate hikes for 2024.
Central Bank's course of policy rate changesIn the period when Central Bank Governor Murat Çetinkaya was removed from office on July 6, 2019 and Murat Uysal was appointed in his place
In the period when Murat Uysal was removed from office as the Central Bank Governor and Naci Ağbal was appointed in his place
In the period when Naci Ağbal was removed from office on March 20, 2021 and Şahap Kavcıoğlu was appointed in his place
* In the months that are not indicated in this table, the policy rate was kept unchanged (The Monetary Policy Committee of the Central Bank convenes every month). |
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