Turkey keeps rates steady, monitors economy closely

    Turkey's central bank kept its policy rate unchanged but is closely monitoring the economy during the current global uncertainties and will adjust funding to banks as needed.
    In a statement following a meeting of the bank's Monetary Policy Committee, the Central Bank of the Republic of Turkey said leading indicators suggested that domestic demand had recovered in the second quarter and exports continued to grow despite the weakening global outlook.

    "The Committee stated that, given the prevailing uncertainties regarding the global economy, it would be appropriate to preserve the flexibility of the monetary policy. Therefore, the impact of the measures undertaken on credit, domestic demand, and inflation expectations will be monitored closely and the funding amount will be adjusted in either direction, as needed," the bank said.


    The central bank's policy rate, the one-week repo rate, was kept at 5.75 percent and overnight rates were left unchanged with the borrowing rate at 5 percent and the lending rate at 11.5 percent.
    The outlook for inflation was also favorable but the bank would continue to monitor prices closely as inflation was expected to remain above the bank's target for some time.

    "Therefore, additional monetary tightening may be implemented along the guidance presented in the April and May committee meetings," the bank said.
    The bank also said the policy committee had approved an additional increase in the flexibility regarding the allowance to hold Turkish lira reserve requirements in foreign currency and gold in order to support financial stability.

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