The Central Bank of the Republic of Turkey (CBRT) announced its policy decision this Thursday and left the one-week repo rate unchanged at 14%, in line with the market expectations.
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Market reaction
The Turkish lira moved little in reaction to the announcement, with the USD/TRY hovering near the lower end of a one-week-old trading range, below mid-13.00s.
Key takeaways from the accompanying policy statement:
- A comprehensive review of the policy framework is being conducted with the aim of prioritizing the Turkish lira in all policy tools.
- Expect the disinflation process to start on the back of measures taken.
- Seeing sustainable price and financial stability along with the decline in inflation owing to the base effect.
- Inflation in the recent period has been driven by distorted pricing behaviour due to unhealthy price formations in fx.
- Inflation is also affected by supply-side factors, commodities.
- The cumulative impact of the recent policy decisions being monitored.
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