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.