Turkey’s Central Bank holds policy rate constant

The Central Bank of Turkey (CBRT) on Thursday kept its one-week repo rate -- also known as the policy rate -- constant at 24%.

"Recently released data show that the rebalancing trend in the economy has continued," the bank said.

The decision came in a statement from the bank's Monetary Policy Committee (MPC) meeting -- the third of eight meetings scheduled for 2019.

"External demand maintained its relative strength while economic activity showed sluggish pace, partly due to tight financial conditions.

"The current account balance is expected to maintain its improving trend," the CBRT said.

According to the latest data, Turkey's current account deficit fell to $718 million in February, down from $4.5 billion deficit a year ago, as the 12-month rolling deficit reached to $17 billion.

Last year, the current account balance posted a deficit of $27.6 billion, improving from a nearly $47.5 billion deficit in 2017.

The figure was the lowest since 2009, while Turkey's highest annual current account deficit over the last decade was seen in 2011 with $74.4 billion.

"Developments in domestic demand conditions have led to some improvement in inflation indicators.

"Yet, higher food and import prices and the elevated course of inflation expectations point to continued risks to price stability," the CBRT said.

As of March, the country's annual inflation stood at 19.71%, while the 12-month average hike in consumer prices was 18.70%.

Over the past decade, annual inflation saw its lowest level at 3.99% in March 2011, while it peaked at 25.24% last October.

"Accordingly, the Committee has decided to maintain the tight monetary policy stance until inflation outlook displays a significant improvement," the bank said.

As noted in the new economy program announced in September 2018, Turkey's inflation rate target is 15.9% this year, 9.8% next year, and 6.0% in 2021.

"The Central Bank will continue to use all available instruments in pursuit of the price stability objective," it said.

"Factors affecting inflation will be closely monitored and monetary stance will be determined to keep inflation in line with the targeted path."

Last Friday, a group of 20 economists surveyed by Anadolu Agency also forecast no change in interest rates.

In 2018, the bank held nine MPC meetings, as interest rates climbed from 8% to 24% over the course of the year.