MNI CBRT WATCH: Rates On Hold, Sees Expectations Upside Risk
MNI (LONDON) - The Central Bank of the Republic of Turkey held key interest rates at 50% on Thursday, as expected, with “no discernable change” in underlying inflation trends in August and with inflation expectations and pricing behaviour continuing to pose risks to the disinflation process. (See MNI EM WATCH: CBRT To Hold Steady, Look For Further Progress)
Domestic demand continued to slow in Q3, and is having a weaker impact on inflation, the Bank said in a statement, while core goods inflation remains low “despite a slight uptick.”
TIGHT STANCE
The Committee reiterated that the CBRT’s 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, and that it stands ready to use all its tools, including macroprudential measures, if necessary. (See MNI EM INTERVIEW: CBRT May Cut To Boost Growth-Ex-Gov Official)
"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, the disinflation process will gain strength,” the Bank said.