Turkey’s Central Bank keeps key rate unchanged at 24 percent

ANKARA

The Central Bank of Turkey has kept its policy rate (one-week repo auction rate) unchanged at 24 percent as widely expected.

“Recently released data show that a rebalancing trend in the economy has continued,” the bank said in a statement released after a Monetary Policy Committee (MPC) meeting held yesterday.

“External demand maintains its relative strength while economic activity displays a slow pace, partly due to tight financial conditions,” it added.

The bank said the country’s current account balance is expected to maintain its improving trend.

According to the latest available data, Turkey’s current account shortfall narrowed to $589 million in March, decreasing by $4.14 billion compared with the same month in 2018.

Treasury and Finance Minister Berat Albayrak said on June 3 that Turkey is likely to post a current account surplus in June.

“We will strengthen our production and export-led economic model with steps in every area, and put the current account issue out of our agenda,” he said.

Disinflation underway

In the statement released after yesterday’s MPC meeting, the Central Bank also noted that developments in domestic demand conditions and the tight monetary policy support disinflation.

“In order to contain the risks to the pricing behavior and to reinforce the disinflation process, the Committee has decided to maintain the tight monetary policy stance.”

The bank reiterated that it will continue to use all available instruments in pursuit of the price stability objective.

“Factors affecting inflation will be closely monitored, and monetary stance will be determined to keep inflation in line with the targeted path,” it said.

The Central Bank will hold more MPC meetings in the remainder of 2019.

In 2018, the bank held nine MPC meetings, as interest rates climbed from 8 percent to 24 percent over the course of the year.