Central Bank keeps policy rate unchanged as expected

As widely expected, Türkiye's Central Bank kept its policy rate unchanged at 45 percent after eight straight months of rate hikes.

Since June 2023, the bank increased the one-week repo auction rate by a cumulative 3,650 basis points. Last month, it lifted the rate by 250 basis points to 45 percent and said that the monetary tightness required to establish the disinflation course was achieved.

"The current level of the policy rate will be maintained until there is a significant and sustained decline in the underlying trend of monthly inflation and until inflation expectations converge to the projected forecast range," the Central Bank said on Feb. 22 in a statement released after the Monetary Policy Committee meeting.

The MPC met for the first time after Fatih Karahan took the helm of the Central Bank earlier this month.

Monetary policy stance will be tightened in case a significant and persistent deterioration in the inflation outlook is anticipated, the bank added.

The committee will continue to implement macroprudential policies in a way to preserve the functionality of the market mechanism and macro-financial stability, the statement said, adding that the monetary transmission mechanism will be supported in case of unanticipated developments in credit growth and deposit rates.

"In order to support the monetary tightness, developments in market liquidity will be closely monitored and sterilization tools will be effectively used whenever needed."

Taking into account the lagged effects of monetary tightening, the committee will determine its policy decisions in a way that will create monetary and financial conditions necessary to ensure a decline in the underlying trend of inflation and to reach the 5 percent...

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