The Central Bank of the Republic of Türkiye held its one-week repo rate unchanged at 50.00% at its July 2024 meeting, extending the pause to a fourth consecutive decision. The Monetary Policy Committee cited the lagged effects of monetary tightening as the rationale for keeping the rate on hold, noting that domestic demand, albeit still at inflationary levels, continued to slow and that the effects of tightening on credit conditions and domestic demand were being closely monitored.
The CBRT began a tightening cycle in mid-2023, when a new economic management team reversed the prior policy of unconventionally low interest rates.
INFLATION RETREATS FROM MAY PEAK
Annual consumer price inflation in Türkiye declined to 71.6% in June 2024, stepping back from the peak registered in May. The CBRT's communication acknowledged the decline while cautioning that the process of returning inflation to the bank's medium-term target remained incomplete. The committee pointed to the high level and stickiness of services inflation.
MONETARY TRANSMISSION
The bank's statement in July said recent indicators confirmed that domestic demand continued to slow, and it noted that additional measures had been taken on FX loans to support macro-financial stability and the monetary transmission mechanism.
The committee stated its readiness to tighten monetary policy further if a significant and persistent deterioration in inflation is foreseen.
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