Turkey Central bank’s monetary policy committee increased week repo rate from 8.25%-10.25%. according to a press release. Analysts expected rate to remain unchanged. Committee says global economic activity is recovering, but there are uncertainties. Pandemic impacting financial conditions, capital flows, commodity prices, and international trade. Expansionary fiscal and monetary stances crucial in advanced and emerging countries. Gradual normalization steps and credit impulse facilitating recovery.
- The rate increase will lower sovereign risk, speed up economic recovery, and lower long-term interest rates.
- Maintaining the disinflation process requires sustaining a cautious monetary stance.
- The central bank will continue using available instruments to build price and financial stability.
- Following fast economic recovery, strong credit momentum, and financial market developments, inflation was higher than expected.
- Tightening monetary steps since August should be reinforced to contain inflation expectations and risks
A policy rate increase by 200 basis points will restore support price stability and restore disinflation. USDTRY is down 0.84%
