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The Central Bank of the Republic of Turkey (CBRT) announced on Thursday that it raised its policy (one-week repo) rate from 15% to 17%.

Key takeaways from policy statement as summarized by Reuters

“Inflation expectations continue to affect the pricing behavior and inflation outlook adversely.”

“National income data and indicators for the last quarter point to a strong course in economic activity.”

“Restrictions introduced due to the increasing number of cases create uncertainties on the short-run outlook of economic activity, particularly the services sector.”

“Due to the cumulative effects of high credit growth during the pandemic, increases the current account deficit.”

“Tightness of monetary policy stance will be decisively sustained until strong indicators point to a permanent fall in inflation.”

“Low inflation will reverse currency substitution.”

Market reaction

With the initial market reaction, the USD/TRY slumped to its lowest level since November 19 at 7.5570. As of writing, the pair was down 0.82% on the day at 7.5738.