The Central Bank of Turkey’s Monetary Policy Committee decided to keep the policy rate on hold today. The One week repo rate was kept unchanged at 24 percent. Data released recently indicated that rebalancing trend in the economy has become more noticeable. External demand continues to keep its strength while the deceleration in economic activity continues, partially because of tighter financial conditions.
Recent developments about the inflation outlook indicate toward considerable risks to price stability. Price rises have indicated a generalized pattern throughout subsectors, reflecting the movements in exchange rates.
Even if softer domestic demand conditions might partly wane, the deterioration in the inflation outlook upside risks on the pricing behaviour continue to prevail. The Committee has, according, decided to keep the tight monetary policy stance.
According to the MPC statement, the central bank will continue to use all available instruments in pursuit of the price stability objective. Tight stance in monetary policy might be kept decisively until inflation outlook displays a considerable rebound. Inflation expectations, pricing behaviour, lagged impact of recent monetary policy decisions, contribution of fiscal policy to rebalancing process, and other factors impacting inflation would be closely monitored and, if required, further monetary tightening would be delivered.
