The Central Bank meets on certain dates each month and holds meetings of the Monetary Policy Committee. After these meetings, the interest rate decision is announced on a monthly basis.
After cutting the interest rate by 500 basis points in the last 4 meetings last year, the CBRT made no changes in the first 6 meetings of this year. All eyes are on the new interest rate decision to be made now. So, will interest rates go up? What is the market expectation? Here is the answer…
Economist Enver Erkan, who has made statements on the subject, used the following statements: “Economic management prefers to stick to the strategy of providing a reading, keeping interest rates low and a growth-oriented economy in general application Alternative measures are taken, such as introducing exchange rates, narrowing certain credit channels and encouraging exporters to sell their foreign exchange earnings.
WILL THE CENTRAL BANK CHANGE INTEREST?
The constraining effects of economic conditions continue. Inflation expectations have reached the 70% range in the market and we expect an inflation rate of 70.1% at the end of the year.
We do not expect the Central Bank, which has maintained its fixed monetary policy for several months, to change interest rates despite rising inflation and monetary tightening movements around the world. The central bank will no longer be active at interest rates it has not touched for several months and will keep interest rates constant.”
Speaking to milliyet.com.tr about this, Prof. Dr. Sefer Şener used the following statements regarding the Central Bank’s interest rate decision:
“The decision of the Central Bank of the Republic of Turkey (CBRT) on the interest rate will be directly proportional to market expectations. The Central Bank is expected to keep the interest rate constant at 14.
The Fed’s aggressive attitude and the ECB’s decision will naturally lead the CBRT to review certain data. It is very likely that the CBRT will not change its decision on interest rates this week.
On the other hand, considering the global inflation and the inflation in Turkey, which affect the interest rate decision of the CBRT, and the decisions of the central banks of developing and emerging countries, in particular the Fed and the ECB, the CBRT must reconsider certain data. However, the market expects the Central Bank to keep the interest rate constant.
DECISION TAKEN AT THE LAST MEETING
At the meeting chaired by Central Bank Governor Şahap Kavcıoğlu, the key rate was kept constant at 14%. In the statement made after the meeting of the Monetary Policy Committee (MPC), it was stated that geopolitical risks, the effects of which continued to increase, materialized negatively in the first half of the year and caused a weakening of economic activity around the world.
In the statement, it was noted that global growth forecasts continue to be updated downwards, “Growing uncertainties over global food security due to trade bans, high commodity prices, continued supply constraints in some sectors, particularly in staple foods and energy, and high transportation costs are driving up producer and consumer prices internationally.
EUROPE’S INTEREST DECISION WILL ALSO BE SET TODAY
On the global side, an interest rate decision will come from the European Central Bank today. As the euro continues to depreciate against the dollar, an increase in the key rate of 25 or 50 basis points will be discussed.
THE FED WILL ANNOUNCE ITS INTEREST RULING ON JULY 27
The US Federal Reserve will announce its interest rate decision on July 27. The interest rate decision to be made after the highest inflation figure in 41 years is being watched closely by the markets. The Fed is expected to raise rates by 75 or 100 percentage points to contain inflation.
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