Central Bank of Turkey Keeps Policy Rate at 45 Percent

In the announcement, it was stated that in January, the main trend of monthly inflation increased as a result of time-dependent price and wage updates specific to the first month of the year, and headline inflation recorded a limited increase. The indicators for the recent period indicated continued stabilization in domestic demand.

The announcement emphasized that "This stabilization process is strong in consumer goods and gold imports, while it progresses slower than expected in other consumer spending indicators. In addition, rigidity in service prices, geopolitical risks, and food prices continue to keep inflation pressures alive. The Committee will closely monitor the alignment of inflation expectations and pricing behaviors with forecasts and the impact of wage increases on inflation."

It was stated in the announcement that external financing conditions, the level of reserves, the improvement in the current account balance, and the demand for Turkish lira assets continued to contribute to exchange rate stability and the effectiveness of monetary policy. The announcement used the expression "The steadfast stance in monetary policy will continue to contribute to the process of real appreciation of the Turkish lira, one of the main elements of disinflation."

In the announcement, the following points were noted:

"The Committee assessed that the current level of the policy rate will be maintained until a significant and permanent decrease is achieved in the main trend of monthly inflation and inflation expectations approach the forecasted range. In case of a significant and permanent deterioration in the inflation outlook, the monetary policy stance will be tightened."

"THE COMMITTEE WILL USE ALL INSTRUMENTS AT ITS DISPOSAL WITH DETERMINATION IN LINE WITH THE MAIN OBJECTIVE OF PRICE STABILITY"

It was stated in the announcement that the Committee will continue to implement macroprudential policies in a manner that preserves the functionality of the market mechanism and macro-financial stability, and in this context, the monetary transmission mechanism will be supported in case of developments beyond the envisaged credit growth and deposit interest rate.

The announcement stated that liquidity developments will be closely monitored to support monetary tightness and sterilization tools will be effectively used, and it was recorded as follows:

"The Committee will determine its policy decisions in a manner that will provide monetary and financial conditions that will reduce the main trend of inflation and reach the target of 5 percent in the medium term, taking into account the delayed effects of monetary tightening. Indicators regarding inflation and the main trend of inflation will be closely monitored, and the Committee will use all instruments at its disposal with determination in line with the main objective of price stability. The Committee will make its decisions in a predictable, data-oriented, and transparent framework. The Monetary Policy Committee Meeting Summary will be published within five business days."