MPC: Done for now

TURKEY - Report 25 Jan 2024 by Murat Ucer and Atilla Yesilada

The Monetary Policy Committee of the CBRT hiked the policy rate by 250 bps to 45% (see chart) and ended the tightening cycle – at least in the near term -- in line with expectations. “Taking into account the lagged impact of monetary tightening, the Committee assesses that the monetary tightness required to establish the disinflation course is achieved and that this level will be maintained as long as needed”, the statement said (link here).

This same paragraph has now been amended to include a specific description of what is meant by the latter: “The Committee assesses that the current level of the policy rate will be maintained until there is a significant decline in the underlying trend of monthly inflation and until inflation expectations converge to the projected forecast range. The Committee will reassess the stance of monetary policy if notable and persistent risks to inflation outlook emerge.”

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