WITH INFLATION AT 5-YEAR LOW, MARKETS EYE MODEST RATE CUT
For the first time in nearly five years, Turkey’s annual inflation rate slipped below 30%, giving the central bank room to consider easing monetary policy at its meeting on Oct. 22.
Analysis
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CENTRAL BANK HOLDS RATE AT 37% AS BUSINESS SECTOR DEMANDS CREDIT RELIEF
The central bank kept its benchmark policy rate unchanged at 37% during its Monetary Policy Committee meeting on July 23, matching market expectations. However, business leaders are increasingly complaining about high borrowing costs, tight credit restrictions, and falling industrial output.
ECONOMISTS DEBATE INTEREST RATE AS CENTRAL BANK PREPARES FOR JULY DECISION
Most market participants expect the central bank to keep the policy rate unchanged at 37% when it meets on July 23, but pressure is building for a cut and some experts are calling for a wholesale shift in monetary policy.
CENTRAL BANK HOLDS MAIN INTEREST RATE AT 37 PERCENT
The central bank kept its benchmark policy rate unchanged at 37% for the third consecutive meeting on June 11, matching the consensus forecast of economists. The Monetary Policy Committee also held its overnight lending rate at 40% and its borrowing rate at 35.5%. The central bank last altered its policy rate in January with a 100-basis-point cut.
OUTGOING CENTRAL BANK DEPUTY GOVERNOR’S REMARKS SPARK POLITICAL BACKLASH
Internal friction among top economy officials came to light after a senior central banker dismissed the impact of political cycles on monetary policy. The remarks by Deputy Governor Cevdet Akçay triggered a sharp rebuke from pro-government figures and suggestions of a rift between the central bank and the Presidency.
KARAHAN: POLICY WILL BE TIGHTENED IF TARGET IS MISSED
Central Bank Governor Fatih Karahan said that if the inflation target is missed, monetary policy will be tightened.
CENTRAL BANK CUTS RATES BY 3 POINTS DESPITE ONGOING INFLATION RISKS
The Central Bank lowered its one-week repo rate from 46% to 43% on July 24, despite warning signs that inflation pressures persist. This was the first cut following the April rate hike. The Monetary Policy Committee also reduced the overnight lending rate from 49% to 46% and the overnight borrowing rate from 44.5% to 41.5%. While June’s core inflation trend remained unchanged, preliminary indicators pointed to a temporary rise in July inflation due to month-specific factors.
THREE FOREIGN POLICY POLES AT THE CHP
Turkey is hit by fallout from inflation-fighting monetary policy. From textiles to automobiles, there are thousands of layoffs in several sectors. The high cost of living is a major source of complaint while the health sector is in crisis too as even patients in need of urgent operations can only get an appointment in six months from state hospitals. Even hard-core AKP voters complain about the quality of education.