Acknowledging a temporary uptick in the underlying inflation trend during January, attributed to month-specific price adjustments, the committee highlighted recent indicators that implied a moderation in domestic demand.

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In addition, stickiness in services inflation, geopolitical risks, and food prices keep inflation pressures alive, the central bank said in a release.

External financing conditions, level of foreign exchange reserves, improvement in current account balance, and demand for Turkish lira-denominated assets continue to contribute to exchange rate stability and the effectiveness of monetary policy, the bank noted.

The determination in tight monetary stance will continue to contribute to Turkish lira’s real appreciation process, which is a key element of disinflation, it said.

The current level of the policy rate will be maintained until there is a significant and sustained decline in the underlying trend of monthly inflation and until inflation expectations converge to the projected forecast range.

Monetary policy stance will be tightened in case a significant and persistent deterioration in inflation outlook is anticipated, it added.

Fibre2Fashion News Desk (DS)