MNI CBRT WATCH: CBRT Holds Amid Uncertainty, Expectations Risk
MNI (LONDON) - The Central Bank of the Republic of Turkey held its policy rate at 50% on Thursday, amid uncertainty over the pace of disinflation and ongoing upside risk stemming from inflation expectations. (See MNI EM CBRTWATCH: Policy To Hold As Monthly Inflation Ticks Up)
Underlying inflation recorded a “slight increase” of 2.97% in September, the CBRT said in a statement, at the same time as annual inflation fell a little over 2.5 percentage points to 49.38%. (See MNI EM INTERVIEW: CBRT To Cut In Q1 2025 - Ex-Official Ozatay)
Third quarter indicators point to domestic demand slowing towards disinflationary levels, with core goods inflation remaining low and an improvement in services inflation expected in Q4. However, “uncertainty regarding the pace of improvement in inflation has increased in light of incoming data," the Bank said. In addition, inflation expectations and pricing behaviour still pose risks to the disinflation process, the Monetary Policy Committee noted.
The CBRT maintained a hawkish tone, reiterating that a 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.”