MPC delivers more than expected

TURKEY - Report 07 Jun 2018 by Murat Ucer

At today's regular meeting, the Monetary Policy Committee hiked the one-week repo rate (policy rate) — and along with it all other rates — by 125 basis points (bps), which was notably higher than the market expectations of around 50 bps.

In terms of the content of the statement, the CBRT acknowledged the ongoing slowdown in growth led by domestic demand, adding it a positive twist by stating that "recently released data indicate a rebalancing trend in the economic activity". On inflation, it said cost factors are the main drivers of the recent upsurge in inflation but also observed that “price increases have shown a generalized pattern across subsectors”. Finally, the CBRT reinserted the statement on monetary policy outlook that further monetary tightening will be delivered, if needed.

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