Turkey: CBRT leaves policy rate unchanged at 19% as expected

The Central Bank of the Republic of Turkey (CBRT) announced on Thursday that it left its policy (one-week repo) rate unchanged at 19% as expected. 

Key takeaways from policy statement as summarized by Reuters

"Taking into account the high levels of inflation and inflation expectations, the current tight monetary policy stance will be maintained decisively until the significant fall in the inflation report’s forecast path is achieved."

"Policy rate will continue to be determined at a level above inflation."

"Decelerating impact of the monetary tightening on credit and domestic demand is being observed."

"High levels of inflation expectations continue to pose risks to the pricing behavior and inflation outlook."

"Leading indicators show that domestic economic activity remains strong in the third quarter."

"Commercial loan growth exhibits a mild course."

"Personal loan growth recently displayed a rise due to the reopening and deferred demand."

"Favorable external demand conditions and current tight monetary policy impact the current account balance positively."

"Current account is expected to post a surplus in the rest of the year due to the strong upward trend in exports."

Market reaction

The USD/TRY pair edged lower following the policy statement and was last seen losing 0.8% on the day at 8.56.