The Central Bank of Turkey lowered the interest  rate by 1 point in line with expectations. In the text of the resolution, it was stated that it was decided to complete the use of the area implied by the temporary effects of supply-side and incidental factors outside the monetary policy impact on price increases. In the text, it was stated that the monetary policy framework will be reviewed in the first quarter of 2022.

Here is the statement made by the Central Bank;

The Monetary Policy Committee (Board) decided to reduce the one-week repo auction rate, which is the policy rate, from 15 percent to 14 percent.

The resumption of closure measures and travel restrictions due to new variants of the epidemic keeps downside risks on global economic activity alive and increases uncertainties. The recovery in global demand, the high course of commodity prices, supply constraints in some sectors and the increase in transportation costs lead to an increase in producer and consumer prices on an international scale. While the effects of high global inflation on inflation expectations and international financial markets are closely monitored, central banks of developed countries consider that the rise in inflation may take longer than expected due to rising energy prices and supply-demand mismatch. In this framework, despite the divergence in the monetary policy communications of the central banks of developed countries due to the differing outlook in economic activity, labor market and inflation expectations among countries, central banks maintain their supportive monetary stances and continue their asset purchase programs.

National income data and leading indicators point to a strong course of domestic economic activity, also driven by foreign demand. The spread of vaccination throughout the society allows the services, tourism and related sectors that were negatively affected by the epidemic to revive and economic activity to be maintained with a more balanced composition. With the strengthening of the upward trend in exports, the current account balance is expected to have a surplus in 2022. The continuation of the improvement trend in the current account balance is important for the price stability target, and in this context, commercial and individual loans are followed closely.

In the rise in inflation observed in November; Exchange rate developments, increases in global food and agricultural commodity prices, supply-side factors such as disruptions in supply processes and demand developments are influential. The Board decided to complete the use of the area implied by the temporary effects of supply-side and incidental factors outside the monetary policy impact on price increases, by reducing the policy rate by 100 basis points. The cumulative effects of the decisions taken will be closely monitored in the first quarter of 2022, and a comprehensive policy framework review process will be carried out in this period in order to reshape price stability on a sustainable basis.

In line with its main objective of price stability, the CBRT will resolutely continue to use all the tools at its disposal until strong indicators pointing to a permanent decline in inflation emerge and the medium-term 5 percent target is achieved. The stability to be achieved in the general level of prices will positively affect macroeconomic stability and financial stability through the decrease in country risk premiums, the continuation of reverse currency substitution and the upward trend in foreign exchange reserves, and the permanent decline in financing costs. Thus, a suitable ground will be created for the continuation of investment, production and employment growth in a healthy and sustainable way.