Turkey’s central bank has increased reserve requirements for commercial banks, aiming to manage liquidity and maintain financial stability, Bloomberg reported.
The reserve requirement for short-term lira deposits will rise from 12 percent to 15 percent, while the ratio for long-term lira deposits will increase from 8 percent to 10 percent.
Additionally, the central bank reduced the reserve ratio for foreign currency deposits held in lira, lowering it from 8 percent to 5 percent. The maximum commission rate for banks based on the transition-to-lira ratio was raised from 5 percent to 8 percent.
These measures were taken to strengthen macroeconomic stability and improve the transmission of monetary policy, the bank said. The move comes after the central bank left its policy rate unchanged for the sixth consecutive month, despite inflation concerns.
The central bank has also adjusted policies on the remuneration of required reserves, removing conditions tied to the transition-to-lira rate. The central bank’s efforts are aimed at addressing excess lira liquidity in the market, which has complicated its monetary policy and pressured deposit rates.
Meanwhile, Turkey’s banking regulator, the BDDK, eased risk weights on certain loans used in the calculation of capital adequacy ratios for lenders.
Turkey has been battling a cost-of-living crisis that prompted President Recep Tayyip Erdoğan to drop his opposition to interest rate hikes to combat inflation.
The central bank began to raise its key rate in June 2023, gradually taking it from 8.5 percent to 50 percent.
The last time the central bank increased the key rate was in March.
Central Bank Governor Karahan told Reuters in a July interview that the central bank is determined to combat soaring prices and will stick patiently to its tight policy stance.
The central bank expects disinflation to take hold in the second half of the year and forecasts an end-year rate of 38 percent, due to its tight policy stance. Economists polled by Reuters expect the inflation rate to fall to around 42 percent by yearend.