Skyline at golden hour in Turkey

Turkey Monetary Policy June 2021

Turkey: Central Bank stands pat in June amid a weakened lira and commodity-fueled price pressures

At its 17 June meeting, the Monetary Policy Committee of the Central Bank of Turkey left the one-week repo rate unchanged at 19.00%, amid renewed pressure on the lira and elevated commodity prices. The decision marked the third consecutive hold and met market analysts’ expectations.

In deliberating the decision, the Bank noted that rising commodity prices, domestic demand conditions and supply-side issues in certain sectors, as well as high inflation expectations, continued to pose risks to the inflation outlook. More positively, the Committee noted the effect of prior monetary policy tightening on credit growth, which has begun to ease and should lead to a drop in inflation going forward. Meanwhile, the Bank stated that domestic activity was strong, despite having eased somewhat in the second quarter due to tighter Covid-19 restrictions. Moreover, accelerating vaccination progress has enabled a recovery in the services and tourism sectors, which should support the economy and narrow the current account deficit going forward.

The Bank’s statement was largely unchanged from the prior meeting, noting that the “current tight monetary policy stance will be maintained decisively until the significant fall in the April inflation report’s forecast path is achieved”. Moreover, “the policy rate will continue to be determined at a level above inflation to maintain a strong disinflationary effect”. A loosening of monetary policy is therefore not expected in the near term. However, panelists expect the Bank to cut the one-week repo rate towards the end of the year as price pressures cool.

The next meeting is scheduled for 14 July.

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