Turkey’s Central Bank on Thursday kept its one-week repo rate – also known as the policy rate – steady at 19%, in line with market expectations.
“Taking into account the high levels of inflation and inflation expectations, the current monetary policy stance will be maintained until the significant fall in the April Inflation Report forecast path is achieved,” the bank’s Monetary Policy Committee said in a statement.
Last week, the bank raised its year-end inflation forecast to 12.2% for this year. Inflation is expected to fluctuate between 10% and 14.4% through the end of 2021, it said.
The bank also raised the inflation forecast for 2022 to 7.5%, up from 7%, while keeping its target of 5% for 2023. Turkey’s inflation rate was 17.14% in April, up 0.95 percentage points from 16.19% in March, according to latest data from Turkish Statistical Institute. “The Central Bank will continue to decisively use all available instruments in pursuit of the primary objective of price stability,” it said.
The statement stressed that the policy rate will be determined at a level above inflation to maintain a strong disinflationary effect until strong indicators point to a permanent fall in inflation and the medium-term 5% target is reached.
The Monetary Policy Committee pointed out that consumer loans, along with commercial loans, exhibit a milder course and that the durability of this development is monitored for macroeconomic stability.
“Despite the rise in commodity prices, the strong upward trend in exports, the significant fall in gold imports and the slowdown in credit amid the tightening of financial conditions support the expected improvement in the current account balance,” it said.
In its last meeting on April 15, the Central Bank also kept one-week repo unchanged after raising it by 200 basis points in the previous meeting in March.
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