MPC does the right thing, difficult road ahead

TURKEY - Report 17 Apr 2025 by Murat Ucer

At its meeting today, the MPC/CBRT raised the policy rate by 350 basis points to 46%, compared to the consensus expectations of no change. While not ruling out a hike, we had also thought that a pause was the more likely outcome. Along with the policy rate, the MPC increased the O/N lending rate to 49% from 46%, and the O/N borrowing rate to 44.5% from 41%. In so doing, the Bank lowered the upper (band of the) corridor by 50 bps to 300 bps (from 350 earlier), while keeping the lower band unchanged (see chart).

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