The dollar started to rise after the Central Bank of the Republic of Turkey (CBRT) lowered the policy rate more than expected.
The CBRT announced today that it lowered the interest rate more than expected and kept it constant at 47.5%. The CBRT had kept the policy rate constant in February, after increasing it for months following the change of the previous administration. The current administration has also made its first interest rate decrease after keeping it constant for a long time.
In the past period, interest rates were quickly reduced to 8.5%, but in line with the decisions taken in the last year and a half, the interest rate reached 50%.
It was said that the policy rate will be determined in a way that will reduce the underlying trend of inflation and provide monetary and financial conditions that will bring inflation to the 5 percent target in the medium term, taking into account the lagged effects of monetary tightening in policy decisions.
In its press release regarding interest rates, the Central Bank of Turkey (TCBM) made the following statement regarding the issue:
The Monetary Policy Committee (the Committee) decided to reduce the policy rate, which is the one-week repo auction interest rate, from 50 percent to 47.5 percent. The Committee also decided to change the operational framework and determine the Central Bank overnight borrowing and lending rates with a margin of -/+ 150 basis points compared to the one-week repo auction interest rate.
The underlying inflation trend remained almost flat in November. Leading data indicate a decline in the underlying trend in December. Indicators for the last quarter show that domestic demand continues to slow down and remains at levels that support the decline in inflation.
Despite the data exceeding expectations, there was no major change in the dollar price. According to Binance data, the USDT/TRY parity is being traded at 35.35 after the announcement.
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