Turkey’s Central Bank keeps policy rate constant

ANKARA (AA): Turkey’s Central Bank on Wednesday kept its one-week repo rate — also known as the policy rate — constant at 24 percent.

“Recently released data show that rebalancing trend in the economy has become more noticeable,” the Central Bank of Turkey (CBRT) said.

The decision came in a statement from the bank’s Monetary Policy Committee (MPC) meeting, which is the second of eight meetings scheduled for 2019.

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

“Current account balance is expected to maintain its improving trend,” the bank said. Last week, all of the 19 economists surveyed by Anadolu Agency also forecast no change in interest rates.

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

Last year, the current account balance posted a deficit of $27.6 billion, improving from a nearly $47.5 billion deficit in 2017.

The figure was the lowest since 2009, while Turkey’s highest annual current account deficit over the last decade was seen in 2011, with $74.4 billion.

“Developments in import prices and domestic demand conditions have led to some improvement in inflation indicators,” the bank said.

“Yet, risks on price stability continue to prevail.”

Turkey saw an annual hike of 19.67 percent in consumer prices in February, going down 0.68 percentage points from 20.35 percent in January.

According to the official figures, the 12-month average hike in consumer prices was 17.93 percent as of February.

Over the last decade, annual inflation saw its lowest level at 3.99 percent in March 2011, while it peaked at 25.24 percent in October 2018.

“Accordingly, the Committee has decided to maintain the tight monetary policy stance until inflation outlook displays a significant improvement,” the bank said.

In January, the CBRT revised its year-end inflation forecast, dropping to 14.6 percent from 15.2 percent.

As noted in Turkey’s new economy program announced in September 2018, the country’s inflation rate target is 15.9 percent this year, 9.8 percent next year, and 6.0 percent in 2021.

“The Central Bank will continue to use all available instruments in pursuit of the price stability objective,” it said.

The bank also said further monetary tightening will be delivered, if needed.