The Central Bank of the Republic of Türkiye (CBRT) on Thursday hiked its benchmark policy rate by 250 basis points in the seventh consecutive rise under the new governor and shift in policy making.
The central bank raised its one-week repo rate to 42.5% from 40%, meeting economists’ expectations following three hikes of 500 basis points in the previous three meetings, but signaled it expects “to complete the tightening cycle as soon as possible.”
Economists polled by Anadolu Agency (AA) in a survey last week estimated the bank would deliver a rate hike of 250 basis points. Similarly, the key rate was expected to climb to 42.5%, according to the median response of 12 institutions in a Reuters poll.
The Monetary Policy Committee (MPC) decided to reduce the pace of monetary tightening, as the monetary tightness is significantly close to the level required to establish the disinflation course, the central bank said in the statement.
“The committee anticipates to complete the tightening cycle as soon as possible,” it added, pledging that monetary tightness would be maintained “as long as needed to ensure sustained price stability.”
The central bank expects inflation to rise from nearly 62% last month to 70%-75% in May, before dipping to about 36% by the end of next year as tightening cools prices.
Inflation hit a 24-year peak of 85% last year and surged again in recent months as the Turkish lira weakened after a long easing cycle that has been reversed by the new economy administration appointed after the May elections.
