Central Bank of Türkiye Holds One-Week Repo Auction Rate at 37%

The Central Bank of Türkiye’s Monetary Policy Committee kept the one-week repo auction rate at 37% in its June 11 decision, saying the underlying trend of inflation, which had risen in the first months of the year and increased again in April partly because of higher energy prices, decreased slightly in May, while first-quarter data pointed to slower economic activity and leading indicators suggested domestic demand would remain weak. The decision followed a 100 bp cut in January from 38%, after which the rate was held in March and April. The Committee also left the overnight lending and borrowing rates unchanged at 40% and 35.5%, respectively, and said monetary transmission would be supported with additional macroprudential measures if unanticipated developments emerge in credit and deposit markets, with liquidity conditions continuing to be monitored closely. It reiterated that the tight monetary stance will be maintained until price stability is achieved, with the medium-term inflation target at 5%, while geopolitical developments and related uncertainties are keeping energy prices volatile and elevated and are being watched for their effects on costs, activity and expectations. The Committee said future decisions will remain meeting-by-meeting and focused on the inflation outlook, and repeated that policy will be tightened if a significant and persistent deterioration in the inflation outlook occurs, while stressing continued attention to upside inflation risks.