The discount rate on inflation-indexed bonds was increased to 70 percent.

With the letter sent to the banks by the Central Bank of the Republic of Turkey (CBRT), the discount rate of CPI-indexed securities was changed.

In accordance with the decision, the central bank increased the discount rate applied by banks for inflation-indexed bonds held in the collateral pool from 60 percent to 70 percent.

In the article, it was indicated that this change was made with the objective of “increasing the weight of GDBS in the funding structure of Open Market Operations.”

CONTINUE REGULATIONS SIGN

In the article, it was also stated that “Under the text of the strategy, steps will continue to be taken to support TL’s assets in the collateral pool of CBRT market transactions.”

Changes in the discount rate will be effective as of January 9.

The increase in the discount rate on inflation-indexed bonds reduces the amount of lending by CBRT banks when using these bonds as collateral.

Tera Investment Chief Economist Enver Erkan commented on the decision regarding inflation-indexed bonds:

“Those indexed to the CPI had a significant weight in the securities portfolios of banks, with the recently introduced rules it was intended to concentrate the basket of guarantees in fixed-rate GDBS instruments. In an environment where inflation is high, banks provide significant income on the asset side thanks to TÜFEX. Securities with variable returns based on the CPI are a burden on the public, therefore recent collateral rules require a shift from CPI-indexed instruments to fixed interest instruments. To this end, it seems that the discount rate of those indexed to the CPI has been increased from 60 to 70 percent”.