Skyline at golden hour in Turkey

Turkey Monetary Policy April 2019

Turkey: Central Bank stands pat in April but drops its tightening bias

The Central Bank of the Republic of Turkey (CBRT) stood pat at its latest monetary policy meeting on 25 April, leaving the one-week repo rate unchanged at 24.00% for the fifth consecutive meeting. In addition, the Bank sounded notably less hawkish regarding a rate hike in the near future.

The decision to leave the policy rate unchanged reflected a recent drop-off in inflation; in March, inflation fell to its lowest level since August last year after reaching a high of 25.2% in October 2018. However, going forward, the CBRT noted that food prices and import prices are likely to remain elevated, while inflation expectations also appear high, suggesting that inflation won’t fall dramatically in the very near-term. Muhammet Mercan, chief economist at ING, added that “inflation inertia and FX pass-through would be key for the inflation outlook in the period ahead, though the current economic backdrop—with ongoing weakness in domestic demand and base effects—will remain supportive [to the inflation outlook].”

In the CBRT’s meeting press statement, the Bank stated it would maintain its tight stance until marked improvements in inflation are displayed. However, the Bank came off as less hawkish by removing its tightening bias, changing its forward-looking guidance to note that “the monetary stance will be determined to keep inflation in line with the targeted path” instead of “factors affecting inflation will be closely monitored and, if needed, further monetary tightening will be delivered.”

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest