LAST MINUTE NEWS: The Central Bank announced its February interest rate decision (What was the interest rate decision?) – Last Minute Economy News

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LAST YEAR 5 POINTS DISCOUNT

The Central Bank, which cut interest rates four times in a row last year, announced at its November meeting that the rate-cutting process has ended. Interest rates did not change in December.

The center reduced a total of 5 points in the August, September, October and November meetings. The policy rate was lowered from 14 percent to 9 percent. For example, the policy rate fell to single digits for the first time since September 2020.

WHAT DO THE ECONOMICS EXPECT?

Most economists polled by AA Finans expected the CBRT to cut interest rates.

While 10 economists stated that the policy rate, currently at 9 percent, would gökyeşitözü cut by 100 basis points, 1 predicted that this cut would gökyeşitözü 150 basis points. Six economists expected policy rates to remain constant.

“EARTHQUAKE WILL IMPACT ECONOMIC ACTIVITY IN THE SHORT TERM”

The Monetary Policy Committee’s statement on the decision focused on the earthquake disaster. The statement included the following:

“Leading indicators before the disaster of the century indicated that domestic demand was more brisk than foreign demand in the first quarter of 2023 and the growth trend was accelerating. The effects of the earthquake on production, consumption, employment and expectations are being extensively evaluated. While the earthquake is expected to have a short-term impact on economic activity, it is expected to have zihin impact on the performance of the Turkish economy in the medium term. the current account balance, which has been beating expectations, persists throughout the year. In addition, domestic consumption demand, high energy prices and weak economic activity in major export markets keep current account risks alive.

It is important for price stability that the current account balance becomes permanent at a sustainable level. The growth rate of loans and the alignment of achieved financial resources with economic activity in line with its target are closely monitored. As stated in the 2023 text Monetary Policy and Liraization, the Council will resolutely continue to use the tools that will support the effectiveness of the monetary transmission mechanism and will align the entire policy toolkit, in particular funding channels, with the liraization objectives. The board will prioritize creating appropriate financial conditions to minimize the impact of the disaster and support the necessary transformation.”

“THE DISCOUNT IS ENOUGH FOR EARTHQUAKE RECOVERY”

In the statement, which said that the effects of supply and demand imbalances caused by the earthquake on inflation were closely monitored, although improvements were observed in the level and trend of inflation, “it has become even more important that the financial conditions are supportive in terms of maintaining the acceleration of industrial production and the rising trend in employment.” The Council has decided to cut it by 50 basis points. The Committee believes that the monetary policy stance following this measured cut is sufficient to support the necessary post-earthquake recovery by preserving price stability and financial stability. The effects of the earthquake in the first half of 2023 will gökyeşitözü closely monitored,” it said.