CBRT stands pat in January, to maintain tight monetary policy stance

The Central Bank of Turkey’s Monetary Policy Committee stood pat during its meeting today. The committee decided to keep the short term interest rates on hold. The Marginal Funding Rate was kept at 9.25 percent and the borrowing rate was maintained at 7.25 percent. The one-week repo rate was kept at 8 percent.

The recently released data show that the Turkish economic activity continues to keep its strength. Domestic demand continues to expand and external demand contributes positively to exports. Current elevated levels of inflation and inflation expectations continue to pose risks on the pricing behavior. The policy statement noted that the Committee has decided to maintain the tight monetary policy stance.

The statement also noted that the CBRT will “continue to use all available instruments in pursuit of the price stability objective. Tight stance in monetary policy will be maintained decisively until inflation outlook displays a significant improvement, independent of base effects and temporary factors, and becomes consistent with the targets.”

The Committee stated that inflation expectations, pricing behavior and other factors impacting inflation would be watched closely and, if required, additional monetary tightening will be delivered.

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