Turkish Central Bank unveils steps to support monetary tightening

By Tuba Ongun

ANKARA (AA) - The Turkish Central Bank on Tuesday announced a set of measures to support monetary tightening as pledged at its latest meeting.

The bank raised the monthly maximum interest rate applied to credit card cash utilization and overdraft accounts to 2.89%, aiming to control inflation and balance domestic demand.

The growth limit for vehicle loans was reduced to 2% from 3%, and the limit for general purpose loans was kept unchanged at 3%

To complement the steps supporting the tightening process, the bank lowered the monthly growth limit for lira commercial loans to 2.5% from a previous 3%, excluding export, investment, and agriculture loans.

Export and investment loans as well as loans for the earthquake zone will be exempted from all credit restricting measures of the Central Bank, said a statement.

Commenting on the move, Treasury and Finance Minister Mehmet Simsek said the government is taking measures with the aim of improving the balance of payments, trimming public deficits, and lowering inflation.

"The decisions announced by the Central Bank today are aimed at lowering the current account deficit and reducing inflation in the medium term. We will continue to channel our limited resources to exports and investments." Simsek wrote on Twitter.

In its latest Monetary Policy Committee last week, the bank raised its one-week repo rate, also known as the policy rate, by 250 basis points on Thursday to 17.5%, the highest level since October 2021.