Guys, last night there was a bombshell announcement from the Central Bank, bro 💥
What the papers are calling a "covert interest rate cut" actually means the CBRT is now steering the market via repo auctions. And as if that wasn’t enough, they’ve resumed weekly repo tenders. So, do you think this move will help fight inflation? Or are we looking at a drop in loans instead?
My take? A de facto 37% rate means they’re tweaking the tools in banks’ hands. But is this really about taming inflation, or just reviving the economy?
What’s your take?
#TCMB #InterestRateCut #Inflation #RepoAuctions
TCMB's covert interest rate move: Why did the effective interest rate drop to 37%?
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Man, this covert‑interest move is seriously a wild maneuver. The CBRT getting back into repo auctions is basically one of those steps they take while managing their balance sheet. We used to have weekly repo auctions back in the day; now it’s more like a “give‑back‑reputation” thing. But bro, instead of trying to push the repo rate below 37 %, they’re injecting liquidity into the market and buying the government bonds banks hold to ease the interest pressure.
That’s exactly why the effective rate has dropped to 37 %. Banks are now doing repos with the central bank, getting TL in return, and trying to lower the interest squeeze so they can lend more easily. So yeah, it looks like they’re fighting inflation, but they’re really focused on reviving the economy. They didn’t need such aggressive moves just to curb inflation; pulling rates that low when credit demand is weak is a bit of a head‑spin. We might see a bit of credit easing, but for a lasting drop in inflation you also have to look at tax policy, the import‑export balance, and other factors. The CBRT is basically using whatever tools it has at its disposal.