Investors focus on Central Bank’s (CBRT) interest rate decision to be announced today
As the dollar/TL follows a limited fluctuating course around 13.5, investors have focused on the Central Bank’s (CBRT) interest rate decision to be announced today. In a Reuters poll about the meeting of the Central Bank, where it will announce its results at 14:00 today, one participant expected a rate cut, while all other participants predicted that the policy interest rate would be kept constant at 14%.
After inflation rose to 36%, the peak of 19 years, and interest rate cuts in recent months triggered the currency crisis, the CBRT is not expected to change its policy interest rate this month.
Due to frequent changes in the management of the CBRT and the economy in recent years, concerns caused by President Recep Tayyip Erdogan’s low interest rate request and his economic plan, which provides for an excess in the current account balance with production and exports, the TL lost 44% against the dollar last year.
The CBRT had announced that the cumulative effects of the rate cut decisions taken after its December meeting would be closely monitored in the first quarter of 2022 and that the policy framework would be reviewed during this period. Inflation increased to 36.08% per annum, the highest level in 19 years, significantly reflecting the cumulative and instantaneous effects of the sharp depreciation in the TL. Economists say that inflation may rise to 50% before the first half of the year due to the minimum wage hike and rising energy prices. Then, if there is no depreciation in TL in inflation, a decrease is expected towards the end of the year.
