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MNI CBRT WATCH: Turkey CenBank Holds After "Significant" Hike

(MNI) LONDON

The Central Bank of Turkey kept its policy rate at 50% as expected on Thursday, and said that the surprise decision to raise rates by 50bps last month had led to a "significant" tightening in financial conditions. (See MNI EM TURKEY WATCH: Hawkish Hold Seen, Inflation Not Yet At Peak)

"Considering the lagged effects of the monetary tightening, the Committee decided to keep the policy rate unchanged, but reiterated that it remains highly attentive to inflation risks. The tight monetary stance will be maintained until a significant and sustained decline in the underlying trend of monthly inflation is observed, and inflation expectations converge to the projected forecast range," the Bank said in a statement."

The CBRT repeated previous guidance that the monetary policy stance will be tightened in case a "significant and persistent deterioration in inflation is foreseen," it said in a statement.

"The decisiveness regarding tight monetary stance will bring down the underlying trend of monthly inflation through moderation in domestic demand, real appreciation in Turkish lira, and improvement in inflation expectations. Consequently, disinflation will be established in the second half of 2024."

MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com
MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com

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