The Turkish Central Bank on Nov. 18 cut its benchmark one-week repo rate by 100 basis points from 16 percent to 15 percent in line with market expectations.
At its 11th Monetary Policy Committee meeting this year, the bank said recent increases in inflation had been driven by supply-side factors such as rising food and import prices, especially in energy, and supply constraints.
In making the decision, the committee “evaluated the analyses to decompose the impact of demand factors that monetary policy can have an effect, core inflation developments and supply shocks.”
The bank said it will consider to complete the use of the limited room implied by these factors in December.
With the latest cut, the monetary authority has lowered the key rate by 400 basis points since September.
Among 21 economists surveyed by Anadolu Agency on Nov. 16, one predicted a 25-basis-point cut, while five others predicted the bank would cut the rate by 50 basis points, 13 by 100 basis points, and two by 150 basis points.
The median forecast by the economists was a cut in the one-week repo rate of 100 base points, i.e. 1 percentage point.
Economists have projected the year-end policy rate to be 15 percent. Turkey saw an annual increase of 19.89 percent in consumer prices in October, and the Central Bank raised its year-end inflation forecast to 18.4 percent for 2021, up from 14.1 percent in its previous report.
Speaking to his party’s parliamentary group on Wednesday, President Recep Tayyip Erdoğan reiterated his longstanding opposition to higher interest rates, declaring: “We will remove the interest rate burden from the backs of our people.”
Hurriyet Daily News