Central Bank of Turkey stands pat, Committee to maintain tight monetary policy stance until inflation outlook rebounds

The Central Bank of Turkey’s Monetary Policy Committee, today, decided to keep the key interest rate (one-week repo auction rate) on hold at 24 percent.

The recently released economic indicators indicate that rebalancing trend in the Turkish economy has become noticeable. External demand continues to keep its relative strength, while economic activity shows a slow rate, partially because of tight financial conditions. Current account balance is likely to maintain its improving trend, according to the central bank’s press release.

Developments in import prices and domestic demand conditions have led to some rebound in inflation indicators. Yet, risks on price stability continue to prevail. Accordingly, the Committee has decided to continue with the tight monetary policy stance until inflation outlook displays a considerable rebound.

The Turkish central bank will continue to use all available instruments in order to ensure the price stability objective. The press release states that “inflation expectations, pricing behavior, lagged impact of recent monetary policy decisions, contribution of fiscal policy to rebalancing process, and other factors affecting inflation will be closely monitored and, if needed, further monetary tightening will be delivered”.

If any new data or information might lead the Committee to revise its stance.