The Monetary Policy Committee of the Central Bank of the Republic of Turkey (CBRT) kept the one-week repo auction interest rate, which is the policy rate, constant at 50 percent.

Their decision included the following statements:

“The Monetary Policy Committee (the Committee) has decided to keep the policy rate, the one-week repo auction interest rate, unchanged at 50 percent. The main trend of monthly inflation in July increased slightly compared to the previous month, while remaining below the second-quarter average. Indicators for the third quarter indicate that domestic demand continues to slow down, reducing its inflationary impact. While goods inflation is falling, it is assessed that the improvement in services inflation will be delayed. The high course and rigidity in services inflation, inflation expectations and geopolitical developments keep inflationary risks alive. The Committee emphasized that the relative importance of the compatibility of inflation expectations and pricing behaviours with forecasts has increased in terms of the disinflation process.

“MONETARY POLICY STANCE WILL BE TIGHTENED”

The determined stance in monetary policy will reduce the underlying trend of monthly inflation and strengthen the disinflation process through balancing domestic demand, real appreciation of the Turkish lira and improvement in inflation expectations. The Committee decided to keep the policy rate constant, considering the lagged effects of monetary tightening, but reiterated its cautious stance against upward risks to inflation. The tight monetary policy stance will be maintained until a significant and permanent decline is achieved in the underlying trend of monthly inflation and inflation expectations converge to the forecast range. In the event of a significant and permanent deterioration in inflation, the monetary policy stance will be tightened.

“STERILIZATION TOOLS WILL CONTINUE TO BE USED EFFECTIVELY”

In case of unforeseen developments in credit and deposit markets, the monetary transmission mechanism will be supported with additional macroprudential steps. Liquidity conditions are closely monitored considering possible developments. Sterilization tools will continue to be used effectively.

The Committee will determine policy decisions in a way that will reduce the underlying trend of inflation and provide monetary and financial conditions that will bring inflation to the 5 percent target in the medium term, taking into account the lagged effects of monetary tightening.

Inflation and indicators of its main trend will be closely monitored, and the Board will resolutely use all tools at its disposal in line with the primary objective of price stability.

“The Board will make its decisions within a predictable, data-driven and transparent framework. The Monetary Policy Board Meeting Summary will be published within five business days.”

This news was compiled by Haber Aydın editors. https://www.haberaydin.com/

Information about the content was collected from open sources.

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