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The Central Bank of the Republic of Turkey (CBRT) announced on Thursday that it left its policy (one-week repo) rate unchanged 8.25%.

Market reaction

With the initial market reaction, the USD/TRY pair lost nearly 200 pips in a matter of minutes and tested 6.8300 before rebounding modestly. As of writing, the pair was down 0.2% on the day at 6.8400.

Key takeaways from the policy statement

“Economic recovery has started as of May following gradual steps towards normalization.”

“The recovery in exports of goods with the ongoing normalization and low levels of commodity prices will support the current account balance in the upcoming periods.”

“As the normalization process continues, supply-side factors will phase out and demand-driven disinflationary effects will become more prevalent in the second half of the year.”

“Considering all factors affecting the inflation outlook, the committee decided to keep the policy rate unchanged.”

“Saw some increase in the trends of core inflation indicators.”

“Pandemic disease is being closely monitored.”