Turkish Central Bank upholds 8.5 per cent rate to support preserving growth

REGION  23 March 2023 - 18:07

Türkiye's central bank held its policy rate at 8.5% as expected on March 23, saying it had become even more important to keep financial conditions supportive to preserve growth momentum after last month's devastating earthquakes.

In February, the bank cut its policy rate (TRINT=ECI) by 50 basis points to provide stimulus in the wake of the earthquakes which killed more than 50,000 people in Türkiye and left widespread destruction across ten provinces, per Reuters.

After its monthly policy meeting, the bank said it was closely monitoring supply-demand imbalances resulting from the quakes.

"It has become even more important to keep financial conditions supportive to preserve the growth momentum in industrial production and the positive trend in employment after the earthquake," the statement said.

The lira weakened slightly to 19.0480 against the dollar after the announcement.

Last year the bank cut its key rate by 500 basis points in an unorthodox easing cycle designed to counter an economic slowdown, before keeping it steady at 9% in December and January. The stimulus came even as inflation soared above 85% last year and dipped only to 55% in February.

Even before the quakes, analysts said there could be more easing ahead of the May 14 presidential and parliamentary elections, in which President Tayyip Erdogan faces the biggest political challenge of his two-decade rule.

A self-described "enemy" of interest rates, Erdogan has urged monetary stimulus over the last several years to boost growth and exports, though it set off a series of lira crises and stoked prices.

In a Reuters poll, six respondents expected a 50-point cut this month, compared to 12 that expected no change.

Caliber.Az