Finance Minister Nureddin Nebati briefed the Turkish Banking Association, banking watchdog, Banking Regulation and Supervision Agency (BDDK), and state bank officials on the government’s new business model based on low rates, the association said on Saturday, after the pound hit record highs.
“Our banks will continue to use their resources to meet the financial needs of households and the real sector, within the framework of the free market mechanism that works with its rules,” the Association of Banks of Turkey (TBB) said in a statement. . He said the objective of the meeting was to discuss “healthy and steady growth”.
On Thursday, Turkey’s central bank lowered its benchmark policy rate for the fourth consecutive time, in line with market expectations.
The key rate – the one-week repo rate – was lowered by 100 basis points to 14% during the latest meeting of the Monetary Policy Committee (MPC) of the Central Bank of the Republic of Turkey (CBRT) of the year.
The bank also signaled that it would pause the easing cycle to monitor its effects over the next three months. The reduction comes amid a rise in consumer prices, with staples such as food and gasoline prices having jumped recently.
Turkey is pursuing a new economic model based on lower interest rates, which President Recep Tayyip Erdoğan says will boost production, employment, exports and growth.
Erdoğan has repeatedly defended the low rate policy over the past three weeks as necessary to boost growth, exports and credit. The government, regulators and the banking association have all rallied behind the new economic policy.
The president called for “patience” and argued that his approach would ultimately make Turkey less dependent on external factors such as the scale of foreign investment and the price of commodities.