The Turkish Central Bank has kept its 17 percent interest rate unchanged and vowed to continue implementing strong monetary policy to stabilize prices and tackle inflation spurred by the coronavirus related restrictions, the regulator's Monetary Policy Committee said on Thursday
ANKARA (Pakistan Point News / Sputnik - 21st January, 2021) The Turkish Central Bank has kept its 17 percent interest rate unchanged and vowed to continue implementing strong monetary policy to stabilize prices and tackle inflation spurred by the coronavirus related restrictions, the regulator's Monetary Policy Committee said on Thursday.
"The Monetary Policy Committee (MPC) has decided to keep the policy rate (one-week repo auction rate) constant at 17 percent," the regulator said, adding that "the downward effects of the pandemic-related restrictions on the economy are more confined compared to the second quarter of last year."
The regulator stressed that the interest rate might be further increased if the current monetary policy did not result in stable prices and a low inflation rate.
"As regards to the indicators pointing to a permanent fall in inflation and price stability, indicators for the underlying trend of inflation and pricing behavior, diffusion indices, demand and cost factors, and inflation expectations will be monitored closely for their compatibility with the targets in the forecast horizon. Additional monetary tightening will be delivered if needed," the regulator said.
The committee added that the tight monetary policy would enhance the country's financial stability, in general, and facilitate the accumulation of foreign exchange reserves.
"The tight monetary policy stance, besides attaining permanent price stability, will foster macroeconomic and financial stability positively by facilitating the fall in country risk premium, the reversal in currency substitution, the accumulation of foreign exchange reserves and the perpetual decline in financing costs," the regulator said.
On November 19, the Central Bank of the Republic of Turkey increased the interest rate from 10.25 percent to 15 percent in an attempt to contain inflation and promote financial stability, pledging to decrease the key rate after the inflation was restrained. In December, the bank again raised its policy rate to 17 percent, citing the challenges faced by the global economy amid the spike in COVID-19 cases.
