Turkey's Central Bank Keeps Policy Rate Steady at 50%

In its statement, the CBRT highlighted that despite ongoing weakness, the monthly inflation trend in March exceeded forecasts. While the trend in consumer goods and gold imports contributed to the improvement in the current account balance, other indicators for the near term suggested continued resilience in domestic demand. High inflation and rigidity in service prices, along with inflation expectations, geopolitical risks, and food prices, are keeping inflationary pressures alive. The CBRT emphasized its close monitoring of inflation expectations and pricing behaviors.

The significant tightening of financial conditions in March due to previous measures has been noted by the CBRT. The effects of monetary tightening on loans and domestic demand are closely monitored. While maintaining the policy rate, the CBRT reiterated its cautious stance against upward risks to inflation. The bank will continue its tight monetary policy stance until a significant and sustained decrease in the main trend of inflation is achieved and inflation expectations converge to the targeted range. If a significant and sustained deterioration in inflation is anticipated, the bank will further tighten its monetary policy stance. The steadfast stance in monetary policy will help reduce the main trend of monthly inflation and achieve disinflation in the second half of 2024.

The CBRT will continue to implement macro-prudential policies that support market functionality and maintain macro-financial stability. In this context, if there are developments in credit growth and deposit interest rates beyond the expected, the monetary transmission mechanism will be supported. Liquidity developments will be closely monitored, and sterilization tools will be effectively used as needed.

The CBRT will determine its policy decisions to ensure monetary and financial conditions that will reduce the main trend of inflation and achieve the 5% inflation target in the medium term, taking into account the delayed effects of monetary tightening. Indicators of inflation and its main trend will be closely monitored, and the CBRT will use all available tools decisively in line with its primary objective of price stability. The bank will make its decisions in a predictable, data-driven, and transparent framework.