The Monetary Policy Committee (MPC) of the Central Bank of the Republic of Turkey (CBRT) has decided to maintain its one-week repo rate at 50%.
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| Turkish Central Bank |
In a statement released following the meeting chaired by Governor Yaşar Fatih Karahan, the Committee stated that it had decided to keep the policy rate unchanged at 50%.
The statement noted that the underlying trend of inflation had increased slightly in September, adding, "Indicators for the third quarter suggest that domestic demand continues to slow, approaching levels that support the decline in inflation. While core goods inflation continues to be low, an improvement in services inflation is expected in the fourth quarter."
The statement emphasized that uncertainty about the pace of improvement in inflation had increased with recent data, stating, "The Committee noted that inflation expectations and pricing behavior continue to pose a risk to the disinflation process."
The statement said that the determined stance in monetary policy would reduce the underlying trend of monthly inflation and strengthen the disinflation process through domestic demand balance, real appreciation of the Turkish lira, and improvement in inflation expectations. It also stated that while the Committee decided to keep the policy rate unchanged, it reiterated its cautious stance against upward risks to inflation.
The statement indicated that the tight monetary policy stance would be maintained until a significant and permanent decline in the underlying trend of monthly inflation is achieved and inflation expectations converge to the projected forecast range, adding:
"In the event of a projected significant and permanent deterioration in inflation, monetary policy instruments will be used effectively. In the event of developments in the credit and deposit markets that are outside of expectations, the monetary transmission mechanism will be supported by additional macroprudential measures. Liquidity conditions are being monitored closely in light of possible developments. Sterilization tools will continue to be used effectively. The Committee will determine its policy decisions by taking into account the lagged effects of monetary tightening and will ensure the monetary and financial conditions that will reduce the underlying trend of inflation and achieve the medium-term inflation target of 5 percent. Indicators of inflation and the underlying trend of inflation will be closely monitored, and the Committee will resolutely use all the tools at its disposal in line with its primary objective of price stability."
Source: aa