Turkish central bank raises policy rate from 42.5% to 45%

This policy rate level will be maintained until there is a significant decline in the underlying trend of monthly inflation and until inflation expectations converge to the projected forecast range, the bank said. The medium-term inflation target is 5 per cent.

External financing conditions, strengthening in foreign exchange reserves, rebalancing in current account balance and demand for Turkish lira-denominated assets continue to contribute to exchange rate stability and the effectiveness of monetary policy, TCMB said in a release.

The existing level of domestic demand, stickiness in services inflation and geopolitical risks keep inflation pressures alive, the central bank noted.

Domestic demand continues to moderate in line with the projected disinflation process as monetary tightening is reflected in financial conditions, recent indicators suggest.

Inflation expectations and pricing behaviour continued to show signs of improvement.

Fibre2Fashion News Desk (DS)