The Central Bank of the Republic of Turkiye (CBRT) left its policy rate unchanged at 37% at its September meeting, opting to maintain its tight monetary policy stance amid continued inflation risks.
The CBRT also kept its overnight lending rate at 40% and its overnight borrowing rate at 35.5%.
Energy Prices Pose Upside Risk to Inflation
In its statement, the Central Bank said that recent inflation data and leading indicators point to a decline in the underlying inflation trend despite monthly fluctuations.
The bank noted that data on economic activity and the limited pass-through of supply shocks into domestic prices confirm the weakness in domestic demand.
However, it highlighted elevated energy prices driven by geopolitical developments as an upside risk to the inflation outlook. The CBRT said it is closely monitoring the impact of geopolitical developments through the cost, economic activity and expectations channels.
Tight Monetary Policy to Continue
The CBRT reiterated that it will maintain a tight monetary policy stance until price stability is achieved, saying this approach will strengthen the disinflation process through demand, exchange-rate and expectations channels.
The Monetary Policy Committee said future policy-rate decisions would be determined on a meeting-by-meeting basis, taking into account realized inflation, the underlying trend and inflation expectations.
The bank also emphasized that it would tighten its monetary policy stance if there is a significant and persistent deterioration in the inflation outlook.
The CBRT stated that its medium-term objective remains to establish monetary and financial conditions that will bring inflation down to its 5% target.
Source: Patronlar Dünyası / Prepared by: İlayda Gök