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In a widely expected decision, the Central Bank of the Republic of Turkey  (CBRT) today announced that it kept the policy rate (one-week repo auction rate) constant at 24%. With the initial reaction, the USD/TRY pair gained more than 500 pips in a matter of minutes and jumped to its highest level since early October at 5.9627. At the moment, the spot is up 1.3% on the day at 5.94.

Key takeaways from the press release

  • Recently released data show that rebalancing trend in the economy has continued.  
  • Current account balance is expected to maintain its improving trend.
  • Developments in domestic demand conditions have led to some improvement in inflation indicators.
  • Higher food and import prices and the elevated course of inflation expectations point to continued risks to price stability.
  • Accordingly, the Committee has decided to maintain the tight monetary policy stance until inflation outlook displays a significant improvement.
  • The Central Bank will continue to use all available instruments in pursuit of the price stability objective.