Turkish Central Bank Unexpectedly Cuts Benchmark Interest Rate
By Maria Martinez
Turkey's central bank cut its benchmark interest rate on
Thursday, when it had been expected to keep the rate steady as it
had done in the five previous months.
The central bank cut its key rate to 18% from 19%. The benchmark
rate was forecast unchanged at 19% by FactSet.
Despite the rate cut, the central bank shared an optimistic
outlook for the economy.
"Leading indicators show that domestic economic activity remains
strong in the third quarter, with the help of robust external
demand," the bank said.
However, the bank noted that tightness in its monetary stance
started to have a higher than envisaged contractionary effect on
"The Committee evaluated the analyses to decompose the impact of
demand factors that monetary policy can have an effect [on], core
inflation developments and supply shocks. Accordingly it is judged
that a revision in monetary policy stance is needed and the policy
rate was decided to be reduced."
Turkey's inflation rate accelerated on an annual basis in
August, as the consumer price index rose 19.25% on year in August
compared with 18.95% in July.
Turkey's central bank said the recent increase in inflation has
been driven by supply side factors such as a rise in food and
import prices and supply constraints, as well as increasing demand
following the easing of restrictions.
The central bank said it will continue to use all available
instruments until strong indicators point to a permanent fall in
inflation and the medium-term 5% target is achieved in pursuit of
the primary objective of price stability.
Write to Maria Martinez at email@example.com
(END) Dow Jones Newswires
September 23, 2021 07:37 ET (11:37 GMT)
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