Turkey's Central Bank Hikes Rates By 200 Bps

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Turkey’s central bank raised its key rate drastically for the second straight meeting, on Thursday, to lower inflation.

The Monetary Policy Committee of the Central Bank of the Republic of Turkey governed by Naci Agbal decided to lift the key one-week repo rate sharply to 17.00 percent from 15.00 percent.

The bank had raised the rate by 475 basis points at the first MPC meeting of Agbal as governor in November.

“In the forthcoming period, tightness of monetary policy stance will be decisively sustained until strong indicators point to a permanent fall in inflation in line with the targets and to price stability, the bank said in a statement.

The committee said domestic demand conditions, the exchange rate effects, rising global food and other commodity prices and the weakness in inflation expectations continue to weigh on inflation outlook.

After taking into account the end-2021 forecast target, the MPC decided to implement a strong monetary tightening, in order to eliminate risks to the inflation outlook, contain inflation expectations and restore the disinflation process as soon as possible.

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