Turkey's Central Bank Keeps Policy Rate Steady at 50%
ANKARA - The Central Bank of the Republic of Turkey announced its decision to keep the one-week repo auction interest rate unchanged at 50%, maintaining its current monetary policy stance. This decision came after the bank observed a decline in the fundamental trend of inflation in October and noted signs that slowing domestic demand contributed to disinflationary pressures.
Despite the decrease in core goods inflation, unprocessed food prices remain high due to temporary supply disruptions. The bank stated that there have been improvements in inflation expectations and pricing behavior but acknowledged that risks to the disinflation process persist.
The Central Bank emphasized its commitment to a tight monetary policy and aims to achieve its monthly inflation reduction target through a combination of moderating domestic demand, real appreciation of the Turkish lira, and improved inflation expectations. It is also expected that fiscal policy coordination will play a significant role in strengthening the disinflation trend.
The policy rate will be determined based on current and expected inflation, ensuring necessary tightness for the anticipated disinflation path. The bank reiterated its vigilance against inflation risks and its readiness to use monetary policy tools in the event of a significant and persistent increase in inflation.
In response to unexpected changes in the credit and deposit markets, the bank indicated its preparedness to take additional macroprudential measures to support the monetary policy transmission mechanism. Liquidity conditions will be closely monitored, and sterilization tools will be utilized effectively.
The bank’s future policy decisions will be shaped to create conditions that ensure a sustainable decline in inflation and support the medium-term inflation target of 5%. These decisions will be made within a predictable, data-driven, and transparent framework.
The bank maintains its commitment to price stability and continues to monitor inflation indicators and the underlying trend. The summary of the Monetary Policy Committee Meeting is planned to be published within five business days, according to the bank's statement. This decision reflects the bank's ongoing strategy to overcome economic challenges in Turkey and stabilize inflation.