Interest rates

Interest rate press release (2021-49)

Interest rate press release

November 18, 2021

No: 2021-49

Members of the participating committee

Sahap Kavcıoğlu (Governor), Taha Çakmak, Mustafa Duman, Elif Haykır Hobikoğlu, Emrah Şener, Yusuf Tuna.

The Monetary Policy Committee (MPC) has decided to reduce the policy rate (one-week reverse repo bid rate) from 16% to 15%.

Despite the upturn in global economic activity in the first half of the year and the increase in the vaccination rate, new variants are keeping the downside risks to global economic activity alive. Recovering global demand, high commodity prices, supply constraints in some sectors and rising transportation costs have led to increases in producer and consumer prices internationally. Adverse effects of weather conditions in major agricultural exporting countries are observed on world food prices. While the effects of high global inflation on inflation expectations and international financial markets are closely watched, central banks in advanced economies believe that rising inflation due to rising energy prices and imbalances between supply and demand could last longer than expected. As a result, central banks in advanced economies are continuing their favorable monetary positions and asset purchase programs.

Leading indicators show that domestic economic activity remains strong, helped by robust external demand. The spread of national immunization throughout society facilitates the recovery of services, tourism and related sectors, which have been affected by the pandemic, and leads to a more balanced composition of economic activity. While demand for durable consumer goods slows, the recovery continues in non-durable consumer goods. The improvement in the annualized current account is expected to continue over the remainder of the year due to the strong upward trend in exports, and strengthening this trend is important for the objective of price stability.

The recent increase in inflation is due to supply-side factors such as rising food and import prices, especially energy, and supply constraints, increasing administered prices and changes in demand. The change in the stance of monetary policy has started to positively affect commercial lending. In addition, the evolution of consumer loans is closely monitored. The Committee assessed the analyzes to decompose the impact of demand factors on which monetary policy may have an effect, developments in core inflation and supply shocks and decided to reduce the policy rate by 100 basis points at 15%. The Committee expects the transitory effects of supply-side factors and other factors beyond the control of monetary policy on price increases will persist through the first half of 2022. The Committee will consider completing the use of the limited room for maneuver implied by these factors in December.

The CBRT will continue to use all available instruments with determination until solid indicators point to a permanent decline in inflation and the medium-term target of 5% is reached in pursuit of the main objective of price stability. The stability of the general price level will promote macroeconomic stability and financial stability through the fall in the country risk premium, the continued reversal of monetary substitution and the upward trend in foreign exchange reserves, and the


lower financing costs. This would create a viable basis for investment, production and employment in order to continue to grow in a healthy and sustainable manner.

The Committee will continue to make its decisions within a transparent, predictable and data-driven framework.

The summary of the Monetary Policy Committee meeting will be released within five working days.



Central Bank of the Republic of Turkey published this content on November 18, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on November 18, 2021 11:22:03 AM UTC.