Central Bank Announces Interest Rate Decision

We welcome the Central Bank's decision to reduce interest rates and provide additional liquidity to mitigate the adverse effects of the coronavirus pandemic on international trade. The measures taken will make a significant contribution to Turkey's economy and exports. In this context, we evaluate the interest rate reduction, additional liquidity provision and supplementary measures taken by the Central Bank of the Republic of Turkey as an important step that will ease the burden on Turkish exporters. These actions have provided exporters with the necessary means to fulfil their export commitments. The Monetary Policy Committee decided to reduce the policy rate—the one-week repo auction rate—by 100 basis points, exceeding expectations, from 10.75 percent to 9.75 percent. In this way, the policy rate has fallen from 24 percent over the past year to single-digit levels. Additionally, approximately USD 5.1 billion equivalent in foreign currency and gold liquidity was provided to banks meeting real credit growth conditions. We consider another crucial matter the measures taken regarding rediscount credits for exports and foreign currency-generating services to alleviate the possible impact of global economic uncertainty and difficulties in international trade on real sector companies.

The possibility to defer rediscount credit repayments equivalent to a total of USD 7.6 billion will provide relief to our exporters.

In recent days, the US Federal Reserve and certain other central banks have taken similar steps. The central banks of Australia, South Korea, China, Canada and the United Kingdom also decided on interest rate reductions. From this perspective, it is evident that the motivation behind the decisions taken by central banks is similar to that of the Central Bank of the Republic of Turkey. Due to the virus, international organizations successively lowered global growth forecasts from the 3-3.5 percent level to the 2-2.5 percent level. The Central Bank, taking this into account, stated in its decision that developments related to the coronavirus pandemic have weakened the global growth outlook, that central banks of advanced and developing countries have taken coordinated expansionary steps, and that the global effects of the virus through capital flows, financial conditions, foreign trade and commodity prices are being closely monitored. We are going through a period in which different scenarios regarding the effects of Coronavirus, which has acquired the designation of "global pandemic", on global trade and the world economy are being examined, and governments and central banks are taking and discussing a series of measures. Our country has been among the first to take the threat seriously from the outset and to implement all necessary measures. In this context, we consider the measures announced by our Central Bank to be highly appropriate. As TİM, we will work harder during this critical period and contribute in the best way possible to our country.