No economic recovery in first quarter, says Turkish Central Bank

ANKARA - Doğan News Agency

Turkey’s leading indicators did not signal any economic recovery in the first quarter as high food prices worsened the inflation outlook, the Central Bank said March 18.

“The leading indicators on economic activity did not signal a recovery in the first quarter. The high levels and volatility of food prices are affecting consumer inflation negatively. [Only] a limited rise has been seen in inflation expectations recently,” the Central Bank said in a presentation to bank economists at a meeting organized after the Monetary Policy Committee met to discuss interest rates.

The Central Bank’s Monetary Policy Committee decided to keep the policy rate unchanged at 7.50 percent as expected on March 17.

“The ongoing cautious monetary policy along with prudent fiscal and macro-prudential moves is having a favorable impact on inflation, especially core inflation indicators. However, uncertainty in global markets and elevated food prices necessitates the maintenance of a cautious stance in monetary policy. Accordingly, the committee decided to keep the interest rates at current levels,” the Central Bank said.

Future monetary policy decisions will be conditional on improvements in the inflation outlook, while inflation expectations, pricing behavior and other factors that affect inflation will be monitored closely, the bank said, adding that the cautious monetary policy stance would be maintained by keeping a flat yield curve until there is a significant improvement in the inflation outlook.