The Central Bank of the Republic of Turkey (TCMB) Monetary Policy Committee, at its meeting chaired by Governor Fatih Karahan, left the policy rate unchanged at 37 percent.
According to the bank's statement, the overnight lending rate was kept at 40 percent and the overnight borrowing rate at 35.5 percent.
Inflation Outlook
The statement noted that the main trend of inflation declined slightly in June, but leading indicators point to a temporary rise in July. It said that uncertainties from geopolitical developments are pushing energy prices back up, while the weak course of domestic demand has become more pronounced.
Forward Guidance
The committee stressed that the tight monetary policy stance will be maintained until price stability is achieved. The statement said, "If a significant and persistent deterioration in the inflation outlook occurs, the monetary policy stance will be tightened." It added that decisions will be taken on a meeting-by-meeting basis with a cautious approach, taking into account inflation realizations, the main trend, and expectations.
The bank also announced that if unforeseen developments occur in credit and deposit markets, the monetary transmission mechanism will be supported with additional macroprudential measures. It stated that liquidity conditions will be closely monitored and liquidity management tools will continue to be used effectively.
The central bank reiterated that it aims to create monetary and financial conditions that will bring inflation to the 5 percent target in the medium term. It noted that the Monetary Policy Committee Meeting Summary will be published within five business days.
