STORY: Türkiye's central bank raises policy interest rate by 500 basis points
DATELINE: Sept. 22, 2023
LENGTH: 00:01:18
LOCATION: Ankara
CATEGORY: ECONOMY

SHOTLIST:
1. various of Turkish central bank
2. various of Turkish lira

STORYLINE:

Türkiye's central bank increased its policy interest rate by 500 basis points to 30 percent on Thursday and said it would continue monetary tightening.
   
The central bank's Monetary Policy Committee decided to continue the monetary tightening process to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behavior, the central bank said in a statement.
   
The bank reported that inflation exceeded expectations in both July and August, noting that the strong domestic demand and the persistence of services inflation, coupled with rising oil prices and ongoing concerns about inflation expectations, present further potential upward risks to inflation.
   
"Given the monetary tightening stance, the committee is determined to establish the disinflation course in 2024 in line with the Report," the statement said.
   
The policy rate will be determined in a way that will create monetary and financial conditions necessary to ensure a decline in the underlying trend of inflation and to reach the 5 percent inflation target in the medium term, it said.
   
"Monetary tightening will be further strengthened as much as needed in a timely and gradual manner until a significant improvement in the inflation outlook is achieved," it added.
   
The central bank embarked on a tightening cycle after President Recep Tayyip Erdogan appointed former bankers Hafize Gaye Erkan as central bank governor, and Mehmet Simsek as the head of the Treasury and Finance Ministry in June. Both bankers were considered market-friendly figures.
   
With a new leadership in charge, the central bank already delivered a hike of 750 basis points in August, bringing its benchmark one-week repo rate to 25 percent for that period, the biggest increase since it started a tightening cycle in June.
   
Previously, Erdogan implemented an unconventional monetary policy of lowering interest rates to combat stubborn inflation. However, this strategy has since been abandoned by the new economic team because it stoked additional inflation.
   
The inflation is still on an upward momentum because the government implemented tax increases on a wide range of goods to address its budget deficit and reconstruction costs rose significantly after the deadly earthquakes in southeastern Türkiye in February.

Xinhua News Agency correspondents reporting from Ankara.
(XHTV)