Turkey Leaves Monetary Policy On Hold

The central bank of Turkey left its benchmark one-week repo rate at 8 percent on June 15th 2017 as widely expected. Policymakers noticed the economic recovery is gathering pace although inflationary risks persist. Yet, the inflation remained at double digits for the fourth month at 11.72 percent in May and food inflation reached the highest since 2010. The central bank added that a tight stance in monetary policy will be maintained until the inflation outlook improves. The overnight lending rate was also kept at 9.25 percent and the overnight borrowing at 7.25 percent.

Statement by the Central Bank of the Republic of Turkey: 

Recently released data indicate that the recovery in the economic activity has gained pace. Domestic demand conditions have improved and demand from the European Union economies continues to contribute positively to exports. The economic activity is expected to further accelerate due to the supportive measures and incentives provided recently. The Committee assesses that the implementation of the structural reforms would contribute to the potential growth significantly.

Although recent improvements in cost factors and expected partial correction in food prices will contribute to disinflation, current elevated levels of inflation pose risks on the pricing behavior. Accordingly, the Committee decided to maintain the tight stance of monetary policy.

The Central Bank will continue to use all available instruments in pursuit of the price stability objective. Tight stance in monetary policy will be maintained until inflation outlook displays a significant improvement. Inflation expectations, pricing behavior and other factors affecting inflation will be closely monitored and, if needed, further monetary tightening will be delivered.

It should be emphasized that any new data or information may lead the Committee to revise its stance.

Turkey Leaves Monetary Policy On Hold

Central Bank of Turkey | Joana Taborda | joana.taborda@tradingeconomics.com
6/15/2017 11:40:16 AM