ANKARA, January 25 Following a meeting on Thursday, the Central Bank of Turkey raised the discount rate from 42.5% to 45%, this step coincided with analysts' expectations.
The regulator said back in June last year that it would continue to gradually tighten monetary policy until the forecast for high inflation changes. At the same time, on June 22, the regulator increased the refinancing rate for the first time in more than two years — to 15% from 8.5%. Analysts expected that at the first meeting of the year, the Central Bank would raise the rate to 45%.
““It was decided to raise the discount rate by 250 basis points, to 45%,” the Turkish Central Bank said in a statement.
In December, core inflation increased in accordance with the forecast, the regulator notes. Inflationary pressures remain, but there are signs of a rebalancing of domestic demand, consistent with the target for lower inflation as monetary tightening is reflected in financial conditions.
The Central Bank notes that the level of tightening of monetary policy required for disinflation has been achieved and will be maintained as long as necessary. «The current rate level will be maintained until the underlying trend in monthly inflation declines significantly and inflation expectations move closer to the forecast range. In the event of significant and persistent risks to the inflation outlook, monetary policy tightness will be reviewed,» it said. statement.
On January 11, the Turkish lira updated another historical low against the dollar at 30 liras per dollar. Market participants, during a survey by the Central Bank of Turkey conducted last week, predicted the dollar to lira exchange rate by the end of the year at 40.63 lira.
According to official statistics, inflation in Turkey at the end of December 2023 amounted to 64.77% in in annual terms. At the same time, a group of independent economists ENAG estimates inflation at 127.21%. Turkish authorities expect that by the end of 2024, inflation will almost halve — to 34%, said Finance Minister Mehmet Şimşek.