The Monetary Policy Committee (MPC) of the Central Bank of the Republic of Turkey (CBRT), under the leadership of Yaşar Fatih Karahan, announced its decision to keep the policy rate unchanged at 45%, according to a statement released today.
In the official announcement regarding interest rates from the CBRT, it was revealed that the Committee, in its meeting chaired by Yaşar Fatih Karahan, opted to maintain the policy rate at the current level of 45%.
The statement highlighted that the inflation trend for January saw a rise as a result of time-dependent price and wage updates specific to the first month of the year. It emphasized that indicators for the recent period indicated a continued balance in domestic demand, while acknowledging a slower pace in indicators related to other consumption expenditures compared to forecasts.
“The ongoing balancing process exhibits strength in the import of consumer goods and gold, while indicators for other consumption expenditures are progressing slower than anticipated. Additionally, rigidity in service prices, geopolitical risks, and food prices continue to exert inflationary pressures. The Committee will closely monitor the alignment of inflation expectations and pricing behaviors with forecasts, as well as the impact of wage increases on inflation,” the statement stated.
The announcement underscored the importance of the stability of the Turkish lira’s real appreciation process as a key element of the anti-inflationary measures. It further discussed that external financing conditions, reserve levels, improvements in the current account, and demand for Turkish lira assets continued to contribute to exchange rate stability and the effectiveness of monetary policy.
“The steadfast stance in monetary policy will continue to contribute to the Turkish lira’s real appreciation process, a key element of deflation. The Committee has evaluated that the current level of the policy rate will be maintained until a significant and sustained decrease is achieved in the main trend of monthly inflation, and inflation expectations approach the forecast range. In the event of a significant and sustained deterioration in the inflation outlook, the monetary policy stance will be tightened,” the announcement asserted.
In terms of macro-prudential policies, the statement emphasized the commitment of the Committee to implementing measures that support the functionality of the market mechanism and maintain macro-financial stability. It was highlighted that in case of unexpected developments in credit growth and deposit interest rates, measures would be taken to support the monetary transmission mechanism.
The announcement outlined the close monitoring of liquidity developments to support monetary tightness, with effective use of sterilization tools as necessary. The Committee reaffirmed its commitment to shaping monetary and financial conditions in a way that would lead to a retreat in the main trend of inflation and achieve the medium-term target of 5%.
The concluding remarks of the statement assured that the Committee would make decisions predictably, based on data, and within a transparent framework. The Monetary Policy Committee Meeting Summary would be published within five business days.
source: aa.com.tr / prepared by Melisa Beğiç