Central Bank to meet for key rate decision this week

ANKARA

Türkiye’s Central Bank Monetary Policy Committee will convene on Oct. 23 to decide on the key interest rate following September inflation figures that came in above expectations.

Economists surveyed by AA Finans expect the bank to cut its policy rate by 100 basis points to 39.5 percent. Forecasts ranged between 39 and 40.5 percent, while the median year-end projection stood at 37.5 percent. At its previous meeting, the bank lowered the rate by 250 basis points to 40.5 percent.

The Turkish Statistical Institute (TÜİK) reported on Oct. 3 that annual inflation rose to 33.29 percent in September from 32.95 percent in August, exceeding market forecasts of around 32.5 percent. The increase ended a 15-month streak of declines in annual inflation.

Finance Minister Mehmet Şimşek, attending G20, IMF and World Bank meetings in Washington, said the government’s economic program is yielding results, citing progress in disinflation, fiscal balance and external accounts. “Overall, the disinflation process is on track, the budget deficit is at a reasonable level by international standards and external imbalances have largely been corrected. To make this permanent, we need to accelerate structural reforms,” he said.

Şimşek added that inflation is expected to close the year at around 30 percent, compared with 44 percent last year and 65 percent the year before. He expressed hope that inflation will fall to the 10 percent range next year and reach single digits the following year.

Central Bank Governor Fatih Karahan, speaking at an Atlantic Council event during the IMF and World Bank meetings in Washington, reiterated that price stability remains the bank’s top priority. “The latest figure is 33 percent and the pace of decline has slowed somewhat. This is important, but the progress toward price stability is encouraging,” he said.

“We are still far from our medium-term target of 5 percent. We are determined to maintain a tight monetary policy stance until we achieve price stability and approach our 5 percent inflation target,” Karahan added.