Turkey’s central bank (CBRT) has doubled down on its unorthodox monetary policy stance in recent weeks, following further easing of interest rates and the introduction of new macroprudential measures. In its Monetary Policy and Liraisation Strategy for 2023, the apex institution said it would increase the weight of Turkish lira assets and liabilities in the domestic banking system by using its policy interventions in a “strengthened manner”, which includes, among other things, further changes to the securities maintenance ratio applied to domestic lenders.
By the middle of 2023, the CBRT aims to increase the ratio of lira deposits in the banking system to above 60%, from 53% at the end of December 2022. This objective comes as the central bank looks to prop up the local currency amid surging inflation, which official data puts at 58%, and as the main policy rate continues to fall. Over the past two years, official interest rates have plunged at the behest of the country’s president, with the stated aim of lifting production, investment and employment.
