As widely expected, the Central Bank of Turkey has kept its policy rate (one-week repo) unchanged at 4.5%.
The overnight borrowing and lending rates were also held constant at 3.5% and 7.75%, respectively, the Central Bank said in a statement on Wednesday after its monthly monetary policy committee meeting.
Final domestic demand and exports continue to grow at a moderate pace while the present policy framework is contributing to the improvement in the current account balance, the Central Bank said in the statement.
The cautious monetary policy stance, the macroprudential measures undertaken and weak capital flows will gradually bring down the loan growth rates to more reasonable levels, the Bank asserted.
The Central Bank expects gradual decline in the current account deficit -excluding gold trade- to continue.
Inflation will fall further in the forthcoming period, the Bank said, warning that, however, core inflation indicators are likely to hover above the inflation target for some time due to the exchange rate volatility in recent months.
The Central Bank pledges to maintain the cautious monetary policy stance and continue implementing additional monetary tightening at the appropriate frequency until the medium term inflation outlook is in line with the medium term targets.
In order to contain the repercussions of uncertainties in global monetary policies on the domestic economy, maintaining the increased predictability of the Turkish lira liquidity policy is deemed important, the Central Bank said.
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