Turkey's central bank raises key interest rate from 45% to 50%

21 Mar '24

1 min read

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The Turkish central bank today raised the policy rate, i.e., the one-week repo auction rate, by 500 basis points from 45 per cent to 50 per cent in response to the deterioration in the inflation outlook.
Tight monetary stance will be maintained until a significant and sustained decline in the underlying trend of monthly inflation is observed, the bank said.

The Turkish central bank today raised the policy rate, i.e., the one-week repo auction rate, by 500 basis points from 45 per cent to 50 per cent.

The move by the bank’s monetary policy committee comes amid 67-per cent inflation rate recorded last month—higher than expected.

The committee also decided to adjust the monetary policy operational framework by setting the bank’s overnight borrowing and lending rates 300 basis points below and above the one-week repo auction rate respectively, the central bank said in a release.

Domestic demand remains resilient. Stickiness in services inflation, inflation expectations, geopolitical risks and food prices keep inflation pressures alive, the release noted.

Tight monetary stance will be maintained until a significant and sustained decline in the underlying trend of monthly inflation is observed, and inflation expectations converge to the projected forecast range, the bank said.

The second half of this year will see disinflation, it added.

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