Turkey Leaves Policy Rate Unchanged at 24%


The Central Bank of Turkey held its one week repo auction rate at 24 percent on September 25th as widely expected, following a 625 bps hike last month to support the lira. Policymakers noted that external demand maintains its strength while slowdown in economic activity continues, partly due to tighter financial conditions. Still, the central bank pledged to tighten monetary policy further if necessary. The lira has rebounded recently, erasing the losses inflicted by American sanctions in August, after diplomatic relations with Washington improved.

Statement by the Central Bank of the Republic of Turkey:

Recently released data show that rebalancing trend in the economy has become more noticeable. External demand maintains its strength while slowdown in economic activity continues, partly due to tighter financial conditions.

Recent developments regarding the inflation outlook point to significant risks to price stability. Price increases have shown a generalized pattern across subsectors, reflecting the movements in exchange rates. Although weaker domestic demand conditions will partially mitigate the deterioration in the inflation outlook, upside risks on the pricing behavior continue to prevail. Accordingly, the Committee has decided to maintain the tight monetary policy stance.

The Central Bank will continue to use all available instruments in pursuit of the price stability objective. Tight stance in monetary policy will be maintained decisively until inflation outlook displays a significant improvement. Inflation expectations, pricing behavior, lagged impact of recent monetary policy decisions, contribution of fiscal policy to rebalancing process, and other factors affecting inflation will be closely monitored and, if needed, further monetary tightening will be delivered.

It should be emphasized that any new data or information may lead the Committee to revise its stance.

Turkey Leaves Policy Rate Unchanged at 24%


Central Bank of Turkey | Joana Ferreira | joana.ferreira@tradingeconomics.com
10/25/2018 11:17:44 AM