Central Bank of Turkey Keeps Existing Tight Stance

June 12, 2019

Turkish inflation has eased to a 9-month low of 18.7%, down from 19.1% in April and a peak of 25.2% last October. The economy is rotating away from overheated domestic demand and toward externally-driven growth, but these desired developments have not progressed far enough to persuade officials to take their foot off the monetary brakes according to a statement released today. In 2018, the benchmark 1-week repo rate was lifted more than ten percentage points to its current level of 24.0%. ” In order to contain the risks to the pricing behavior and to reinforce the disinflation process, the Committee has decided to maintain the tight monetary policy stance.” This decision was seen by analysts as the most likely result of this week’s policy review, although a chance of a rate cut had not been universally ruled out. The statement, unlike some in the past, does not assert that significant improvement in the inflation outlook is a necessary prerequisite before any rate cut can be done.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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