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Turkey Monetary Policy April 2023

Turkey: TCMB stands pat in April

On 27 April, the Central Bank of the Republic of Turkey (TCMB) kept the one-week repo rate unchanged at 8.50% for the second consecutive meeting. The hold was in line with the Bank’s previous statements and fulfilled market expectations.

In its communiqué, the TCMB said that leading indicators point to activity recovering faster than expected in the areas affected by the earthquake. Regarding inflation, the Bank stated that price pressures had eased in recent months due to its policies. That said, it reiterated that it was closely monitoring the effect of earthquake-driven supply-demand imbalances on inflation. Meanwhile, the lira weakened markedly in recent weeks, amid uncertainty surrounding May’s general election. Against this backdrop, the Bank decided to leave rates unchanged, thus maintaining its support for the economy without further dampening the lira.

The Bank’s forward guidance was unchanged. It reiterated that rates are “adequate to support the necessary recovery in the aftermath of the earthquake”. Meanwhile, the TCMB also reaffirmed its commitment to the liraization strategy, which aims to ensure that the lira dominates the financial system through regulations on bank reserves and loans.

The next meeting is scheduled for 25 May.

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