Central Bank Keeps The Policy Rate At 7.50 Percent Unchanged (2)

Istanbul, Sep 22 (DHA) - 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 Tuesday.

The composition of growth was expected to shift gradually towards net exports in upcoming periods with the support of rising demand from the European Union economies, said the MPC in its statement, adding that, the Committee assessed that the implementation of the announced structural reforms would contribute to the potential growth significantly.

Energy price developments affect inflation favorably in the short run, while exchange rate movements delayed the improvement in the core indicators, the MPC stated. "Considering the impact of the uncertainty in domestic and global markets on inflation expectations and taking into account the volatility in energy and food prices, the Committee decided to maintain the tight liquidity stance as long as deemed necessary."

The Committee assessed the measures already implemented and to be implemented in the context of the “road map during the normalization of global monetary policies”, said in the statement and stating that the future monetary policy decisions would 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.