The Central Bank of the Republic of Türkiye held its one-week repurchase rate at 37.0% on Thursday, keeping the overnight lending rate at 40.0% and the overnight borrowing rate at 35.5%, saying in its press release that growing uncertainty amid geopolitical developments had pushed energy prices up again.
The central bank has been funding the market through its overnight lending rate rather than one-week repo auctions since suspending the auctions on 1 March, making July the fifth consecutive month of funding through that facility.
CORRIDOR REMAINS ASYMMETRIC
The 40.0% overnight lending rate sits 300 basis points above the 37.0% policy rate. With one-week repo auctions suspended, central bank funding has been provided at the 40.0% overnight lending rate rather than the 37.0% policy rate.
The overnight borrowing rate was held at 35.5%, keeping the lower bound of the corridor 150 basis points below the one-week repo rate.
GEOPOLITICS SHAPES STANCE
The Committee said the impact of geopolitical developments on the inflation outlook through the cost channel, economic activity and expectations was being closely monitored. It said the underlying trend of inflation decreased slightly in June, that leading indicators suggest it will rise temporarily in July, and that recent data confirm the ongoing weakening in domestic demand.
The policy-guidance paragraphs of the statement were unchanged from the June decision. The press release published on the central bank's website repeated that the monetary policy stance will be tightened in case of a significant and persistent deterioration in the inflation outlook.
The Committee said a summary of the meeting would be released within five working days; its next scheduled decision was on 10 September.
The Committee reiterated that it remains highly attentive to upside risks on inflation and that the tight monetary policy stance will be maintained until price stability is achieved.
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