The Central Bank of the Republic of Türkiye kept its one-week repo rate unchanged at 50% on Thursday, the fifth consecutive meeting at which it was held. The Monetary Policy Committee signalled that it remains vigilant and that the tight stance will be maintained until a sustained improvement in underlying price pressures is clearly established.
Annual consumer price inflation stood at 52.0% in August 2024, against the bank's 5% medium-term target. The MPC said core goods inflation remained low despite a slight uptick and that it expected the improvement in services inflation to occur in the last quarter of the year, while inflation expectations and pricing behaviour continued to pose risks to the disinflation process.
SERVICES INFLATION
Services price growth has been identified by the CBRT as one of the key risks to the disinflation path.
The central bank raised its benchmark rate from 8.5% in May 2023 to 50% by March 2024. Officials have since signalled that the tight monetary stance will be maintained until there is a significant and sustained decline in the underlying trend of monthly inflation, with particular emphasis on the monthly pace of price increases rather than the headline annual figure.
The Committee's statement reiterated that monetary policy will remain tight until a significant and lasting decline in the underlying trend of monthly inflation is established and inflation expectations converge towards the projected forecast range.
INFLATION PROJECTIONS AND NEXT MEETING
The bank's own projections, updated in its August inflation report, pointed to a decline in annual inflation towards the end of the year.
The next rate-setting meeting is scheduled for October.
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