The Central Bank of the Republic of Turkey (CBRT) Monetary Policy Board convened under the chairmanship of Yaşar Fatih Karahan.
The Board decided to keep the one-week repo auction interest rate, which is the policy rate, constant at 50 percent.
The following statements were included in the announcement:
The main trend of monthly inflation in March was higher than expected despite the ongoing weakening. While the course of imports of consumer goods and gold contributes to the improvement in the current account balance, other indicators for the near term point to continued resistance in domestic demand. The high course and rigidity of services inflation, inflation expectations, geopolitical risks and food prices keep inflationary pressures alive. The Board closely monitors the compliance of inflation expectations and pricing behavior with forecasts.
“Financial conditions have tightened significantly”
Financial conditions have tightened significantly as a result of the steps taken in March. The effects of monetary tightening on loans and domestic demand are closely monitored. Although the Board decided to keep the policy rate constant, taking into account the lagged effects of monetary tightening, it reiterated its cautious stance against upside risks on inflation. The tight monetary policy stance will be maintained until a significant and permanent decline in the underlying trend of monthly inflation is achieved and inflation expectations converge to the predicted forecast range.
If a significant and permanent deterioration in inflation is predicted, the monetary policy stance will be tightened. Determined stance in monetary policy; It will reduce the main trend of monthly inflation through balancing in domestic demand, real appreciation in the Turkish lira and improvement in inflation expectations, and disinflation will be established in the second half of 2024.
“The Board will use all the tools at its disposal with determination.”
Board; Macroprudential policies continue to be implemented in a way that will protect the functionality of the market mechanism and macro financial stability. In this context, in case of developments other than those anticipated in loan growth and deposit interest, the monetary transmission mechanism will continue to be supported. Liquidity developments will be closely monitored and sterilization tools will be used effectively when necessary.
The Board will determine policy decisions in a way that will reduce the main trend of inflation and provide monetary and financial conditions that will bring inflation to the 5 percent target in the medium term, taking into account the lagged effects of monetary tightening.
Indicators regarding inflation and its main trend will be closely monitored and the Board will resolutely use all the tools at its disposal in line with the main goal of price stability.
