The Central Bank Monetary Policy Committee (PPK) announced its interest rate decision. Accordingly, the CBRT cut the one-week repo auction rate, which is the policy rate, by 100 basis points to 12 percent.
Last month, the MPC surprisingly cut interest rates by 100 basis points.
In the decision text published by the CBRT, the rise observed in inflation; It was stated that the delayed and indirect effects of energy cost increases caused by geopolitical developments, the effects of pricing formations that are far from economic fundamentals, and the strong negative supply shocks caused by increases in global energy, food and agricultural commodity prices continued to be influential.
While informing that the Board predicts that the disinflationary process will begin with the re-establishment of the global peace environment, the evaluation was made, “However, leading indicators for the third quarter indicate that the deceleration in economic activity continues with the effect of decreasing foreign demand.”
In the text of the resolution, “It is important that financial conditions are supportive in terms of maintaining the acceleration in industrial production and the increasing trend in employment at a time when uncertainties regarding global growth and geopolitical risks increase. In this context, the Board decided to reduce the policy rate by 100 basis points, and the policy rate rate was updated under the current outlook. evaluated that the level was sufficient”.
‘DOWN-SIDED UPDATE ON GLOBAL GROWTH FORECASTS’
The following statements were included in the resolution text, which stated that the weakening effect of geopolitical risks on economic activity around the world continues to increase:
“Global growth forecasts for the upcoming period continue to be updated downwards and assessments that recession is an inevitable risk factor are becoming widespread. Although the negative effects of supply constraints in some sectors, especially in basic food, have been reduced thanks to the strategic solution tools developed by Turkey, producers and consumers on an international scale prices continue to rise.
‘DIVERSE IN MONETARY POLICIES’
“The effects of high global inflation on inflation expectations and international financial markets are closely monitored. However, central banks of developed countries emphasize that the rise in inflation may take longer than expected due to rising energy prices, supply-demand mismatch and rigidity in labor markets. “Therefore, divergence continues in the monetary policy steps and communications of the central banks of developed countries. It is observed that efforts to produce solutions with new supportive practices and tools developed by central banks for increasing uncertainties in financial markets continue.”