Central Bank of Turkey keeps key rate on hold, to maintain tight monetary policy stance until inflation rebounds

The Central Bank of Turkey’s Monetary Policy Committee decide to keep the one-week repo auction rate on hold at 24 percent today. The economic data released recently indicated that rebalancing trend in the economy has become more noticeable. External demand continues to keep its strength while the economic activity’s deceleration continues, partially because of tight financial conditions. Current account balance is likely to maintain its improving trend, according to the central bank’s statement released today.

Even if developments in import prices and domestic demand conditions have led to some rebound in the inflation outlook, risks on price stability continue to prevail. The Committee, accordingly, has decided to continue with the tight monetary policy stance until inflation outlook shows a considerable rebound.

The Turkish central bank will continue to use all available instruments in pursuit of the price stability objective. Inflation expectations, pricing behaviour, lagged effect of recent monetary policy decision, 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.

According to the press release, any new data or inflation might lead the Committee to revise its stance.