2023.03.2315:22:00UTC+00Turkish Central Bank Keeps Key Rate Unchanged At 8.50%

Turkey's central bank decided to maintain its key interest rate in its March meeting, as the committee assessed that the current monetary policy stance is adequate to support the necessary recovery in the aftermath of the earthquake by maintaining price stability and financial stability.

The Monetary Policy Committee, led by Governor Sahap Kavcioglu, left the policy rate, or the one-week repo auction rate, unchnaged at 8.5 percent, the Central Bank of the Republic of Turkey, or CBRT, said in a statement.

The decision was in line with economists' expectations. The move was followed by a 50 bps rate cut seen in the February meeting.

The bank assessed that while the earthquake is expected to affect economic activity in the near term, it is anticipated that it will not have a permanent impact on the performance of the Turkish economy in the medium term.

The Committee will prioritize the creation of supportive financial conditions in order to minimize the effects of the disaster and support the necessary recovery, the bank said in a statement.

According to latest official data, Turkey's consumer and producer price inflation continued to remain elevated in February despite easing to 55.18 percent and 76.61 percent, respectively.

While the level and underlying trend of inflation have been improved with the support of the implemented integrated policy approach, the effect of earthquake-driven supply-demand imbalances on inflation is closely monitored, the bank remarked.

The CBRT will continue to use all available instruments decisively until strong indicators point to a permanent fall in inflation and the medium-term 5 percent target is achieved in pursuit of the primary objective of price stability.