Key Highlights of Last Week: CBRT’s Interest Rate Decision, Minister Simsek’s Statements, and Global Market Data

While the CBRT’s interest rate decision and the statements of the Minister of Treasury and Finance Mehmet Simsek stood out in the domestic markets, the data flow in the USA and Japan was followed in the global markets.

1. CBRT kept the interest rate constant

The Central Bank of the Republic of Turkiye (CBRT) left the one-week repo rate at 50%, pointing out that financial conditions have tightened significantly and that monetary tightening will have delayed effects. In the decision text, “Financial conditions have tightened significantly with the impact of the steps taken in March. The effects of monetary tightening on loans and domestic demand are closely monitored. The Board decided to keep the policy rate constant, taking into account the lagged effects of monetary tightening, but reiterated its cautious stance against upside risks on inflation.”

2. VAT regulation in restaurants and cafes

The VAT rate applied to restaurants and cafes, which was 8%, was increased to 10%, and the VAT rate applied to 18% was increased to 20%.

3. Fitch’s assessment of Turkiye

International credit rating agency Fitch Ratings reported that continued improvement in policy consistency could be positive for Turkiye’s credit rating.

4. Bank of Japan kept interest rates unchanged

The Bank of Japan has not changed its monetary policy and expects higher inflation in 2024.

5. US economy grew below expectations in the first quarter

Annualized GDP in the US grew by 1.6% in the first quarter, below the expectation of 2.5%.

6. Simsek: Public sector savings will come into effect in the second half of the year

Minister of Treasury and Finance Mehmet Simsek said that public savings and spending control will come into force strongly in the second half of the year.

7. Interest to be applied to TL required reserves has been increased

While the Central Bank of the Republic of Turkiye (CBRT) kept the policy rate constant at 50%, it also increased the interest rate to be applied to TL required reserves.

Source: Bloomberght / Prepared by Irem Yildiz

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