The Central Bank has announced its interest rate decision. The Monetary Policy Committee kept the official rate unchanged at 14%.
The Board stated that it will implement the set of macroprudential policies it has vigorously strengthened and take further measures if necessary and that the phases of the guarantee and liquidity policy whose assessment processes have been completed will continue to be used.
The following statements were used in the text of the decision published after the meeting:
– Geopolitical risks, the effects of which continue to increase, took place negatively in the first half of the year, causing a weakening of global economic activity. Global growth forecasts for the next period continue to be updated downwards. Growing uncertainties about global food security due to trade bans, high commodity prices, persistent supply constraints in some sectors, notably in basic food and energy, and the high level of transport costs lead to an increase in producer and consumer prices on an international scale. The effects of high global inflation on inflation expectations and international financial markets are closely monitored. However, central banks in developed countries point out that rising inflation may take longer than expected due to rising energy prices and supply / demand imbalances. In this context, due to the different economic outlooks between countries, the divergence in monetary policy measures and communications from the central banks of developed countries is increasing. It is noted that efforts have increased to find solutions with new practices and support tools developed by central banks to increase uncertainties in financial markets.
– Capacity utilization levels and other leading indicators point to strong growth at the start of the year continued into the second quarter with the positive effect of foreign demand. While the share of sustainable components in the composition of growth is increasing, risks stemming from energy prices and tourism-related improvements in the current account remain. It is important for price stability that the current account balance becomes permanent at sustainable levels. The growth rate of loans and the meeting of the financial resources accessed with the economic activity in line with its purpose are closely monitored. The Council will firmly implement the macroprudential policy it has strengthened and, if necessary, take further measures.
– Inflation on the rise; The increases in energy costs caused by geopolitical developments, the temporary effects of price formations that are far from economic fundamentals, the severe negative supply shocks caused by the increases in global prices of energy, food and agricultural commodities continue to be influential. The Council expects that the disinflationary process will begin with the restoration of the global peacetime environment and the elimination of the basic effects of inflation, together with the measures taken and vigorously implemented to strengthen sustainable price stability and financial stability. In this context, the Board decided to keep the policy rate constant. In order to institutionalize price stability in a sustainable way, CBRT continues to review a comprehensive policy framework that encourages permanent and strengthened liralization across all policy instruments. The phases of the guarantee and liquidity policy, whose assessment processes have been completed, will continue to be used to enhance the effectiveness of the monetary policy transmission mechanism.
– In line with the main objective of price stability, the CBRT will continue to vigorously use all the tools at its disposal as part of the liraization strategy, until strong indicators of a permanent decline in inflation emerge and the 5 percent of the medium-term goal is achieved. The stability to be achieved in the general price level will positively affect macroeconomic stability and financial stability through decreasing country risk premia, the continuation of the currency substitution reversal and the upward trend of foreign exchange reserves and the permanent decline in costs. of financing. This will create a suitable ground for continued growth in investment, production and employment in a healthy and sustainable way.
Details coming soon …