Turkey’s central bank holds key rate steady at 50%
2024.11.21 09:57
ANKARA – The Central Bank of the Republic of Turkey announced its decision to maintain the one-week repo auction rate at 50 percent, adhering to its current monetary policy stance. This move comes as the bank observes a decline in the underlying trend of inflation in October, with signs of slowing domestic demand contributing to disinflationary pressures.
Despite the decrease in core goods inflation, unprocessed food prices remain high due to temporary supply disruptions. The bank noted improvements in inflation expectations and pricing behavior but acknowledged ongoing risks to the disinflation process.
The central bank emphasized its commitment to a tight monetary policy, with the aim of reducing monthly inflation through a combination of domestic demand moderation, the Turkish lira’s real appreciation, and better inflation expectations. Fiscal policy coordination is also expected to play a vital role in reinforcing the disinflationary trend.
The policy rate will be set to maintain the tightness required for the anticipated disinflation path, considering both current and forecasted inflation. The bank reiterated its vigilance towards inflation risks and its readiness to utilize monetary policy tools if a significant and persistent increase in inflation is anticipated.
In response to unforeseen shifts in credit and deposit markets, the bank is prepared to support the monetary transmission mechanism with additional macroprudential measures. Liquidity conditions will be closely watched, and sterilization tools will be deployed effectively.
The bank’s future policy decisions will be shaped to foster conditions conducive to a sustained reduction in inflation and to achieve the medium-term inflation target of 5 percent. These decisions will be based on a predictable, data-driven, and transparent framework.
The bank’s commitment to price stability remains firm, with a focus on monitoring inflation indicators and the underlying trend. The summary of the Monetary Policy Committee Meeting is set to be released within five working days, as per the bank’s statement. This decision reflects the bank’s ongoing strategy to navigate economic challenges and stabilize inflation in Turkey.
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