The Central Bank of the Republic of Turkey (CBRT) left the policy rate constant at 37 percent. Expectations were that it would be left constant. Overnight lending and borrowing rates were also kept constant.
CBRT Monetary Policy Committee drew attention to the risk of high energy prices. “Energy prices, which remain high as a result of geopolitical developments, pose an upward risk on the inflation outlook,” the board said in its text. he said.
The Board stated that it will continue to make its decisions based on data.
CBRT MPC text is as follows;
The Monetary Policy Committee (Board) decided to keep the one-week repo auction interest rate, which is the policy rate, constant at 37 percent. The Board also kept the Central Bank’s overnight lending interest rate constant at 40 percent and its overnight borrowing interest rate at 35.5 percent.
Despite monthly fluctuations, recent inflation realizations and leading indicators point to a decline in the main trend of inflation. Data on economic activity and the limited reflection of supply shocks on domestic prices confirm the weak course of domestic demand. On the other hand, high energy prices as a result of geopolitical developments pose an upward risk on the inflation outlook. The effects of geopolitical developments on the inflation outlook through the cost channel, economic activity and expectation channel are closely monitored.
The tight monetary policy stance that will be maintained until price stability is achieved will strengthen the disinflation process through demand, exchange rate and expectation channels. The steps to be taken by the Board regarding the policy rate; It will determine inflation realizations, taking into account its main trend and expectations, in line with the intermediate targets and in a way that will ensure the stringency required by disinflation. Monetary policy decisions are taken with an inflation outlook-focused, meeting-based and cautious approach. In case of a significant and permanent deterioration in the inflation outlook, the monetary policy stance will be tightened. The Board emphasized its cautious stance against upside risks to inflation.
In case of unforeseen developments in the credit and deposit markets, the monetary transmission mechanism will be supported by additional macroprudential steps. Liquidity conditions will continue to be closely monitored and liquidity management tools will continue to be used effectively.
The Board will determine policy decisions to ensure monetary and financial conditions that will enable inflation to reach the 5 percent target in the medium term. The Board will make its decisions in a predictable, data-driven and transparent framework.
Summary of the Monetary Policy Committee Meeting will be published within five business days.
