Central Bank Keeps The Policy Rate At 7.50 Percent Unchanged

- Central Bank of Turkey's Monetary Policy Committee (MPC) has decided to keep the policy rate unchanged at 7.50 percent, as expected. The MPC stated that, the developments made it necessary to maintain the cautious stance in monetary policy.

The Committee also kept other short term rates unchanged, marginal funding rate at 10.25 percent, the interest rate on borrowing facilities provided for primary dealers via repo transactions at 10.75 percent, and borrowing rate at 7.25 percent, said in the statement released by the Central Bank on Thursday.

Food and energy price developments affect inflation favorably in the short run, while exchange rate movements delay the improvement in the core indicators, the MPC said. "This delay, combined with the uncertainty in global markets and volatility in energy and food prices, makes it necessary to maintain the cautious stance in monetary policy. The Committee has therefore decided to keep the interest rates at current levels."

Loan growth continued at reasonable levels in response to the tight monetary policy stance and macroprudential measures, it said. "Future monetary policy decisions will be conditional on the improvements in the inflation outlook. Inflation expectations, pricing behavior and other factors that affect inflation will be monitored closely and the cautious monetary policy stance will be maintained, by keeping a flat yield curve, until there is a significant improvement in the inflation outlook" the MPC added.