Central Bank to meet for rate decision
ANKARA
The Central Bank’s Monetary Policy Committee is set to meet tomorrow to consider the key policy rate.
The meeting will take place after President Recep Tayyip Erdoğan said that interest rates should come down to single digits by the end of the year.
Taking a cue from Erdoğan’s remarks, decision-makers at the central bank are expected to opt for yet another rate cut at this week’s meeting.
Last month, the bank reduced the policy rate (one-week repo auction rate) from 13 percent to 12 percent after delivering a 100 basis points cut in August.
The committee said in a statement released after the rate-setting meeting that it expects the disinflation process to start on the back of measures taken and decisively implemented for strengthening sustainable price and financial stability along with the resolution of the ongoing regional conflict.
The bank will continue to use all available instruments decisively within the framework of the liraization strategy until strong indicators point to a permanent fall in inflation and the medium-term 5 percent target is achieved, the statement added.
The Central Bank yesterday announced that it revised the securities maintenance ratio from 3 percent to 5 percent.
“Further steps as part of the “liraization strategy” will be taken in the rest of the year and in 2023,” the bank said in a statement, noting that by the beginning of 2023, securities will be maintained based on the targets of the Turkish Lira deposits share, instead of the conversion rate.
The statement recalled that the bank started to promote the conversion from foreign currency deposits to Turkish Lira deposits in the scope of the “liraization strategy” in December 2021 and thus took an important step towards reinforcing the preference for Turkish lira deposits.
“As a result of this practice, the share of Turkish Lira in the balance sheets of banks has increased while their funding maturities have extended. Accordingly, the practice has strengthened banks’ balance sheets, thereby supporting financial stability,” it said.
