The Monetary Policy Committee (MPC) of the Central Bank of Turkey announced on Thursday that it will maintain the policy rate, also known as the one-week repo auction rate, at 50 percent.

In a statement following the MPC meeting, the central bank noted that despite a slight uptick in core goods inflation, the underlying trend of monthly inflation showed no significant change in August. "Indicators for the third quarter confirm that domestic demand continues to slow down with a diminishing inflationary impact," the bank said, adding that an improvement in services inflation is expected in the final quarter of the year.

The central bank reiterated its commitment to a tight monetary policy stance, aimed at reducing inflation through moderated domestic demand, real appreciation of the Turkish lira, and improved inflation expectations. "The disinflation process will gain strength as these factors take hold," the statement said.

While the policy rate remains unchanged, the central bank warned of ongoing risks to the disinflation process, including inflation expectations and pricing behaviors. It pledged to maintain its tight stance until a sustained decline in monthly inflation trends is observed, and inflation expectations align with the bank’s projected forecast range.

The central bank also emphasized the importance of monetary transmission mechanisms and noted that additional macroprudential measures would be implemented if unforeseen developments occur in credit or deposit markets. "Liquidity conditions are assessed with respect to prospective developments and closely monitored," the statement said.

Looking ahead, the MPC indicated that it will continue to evaluate the lagged effects of recent monetary tightening measures and adjust policy decisions accordingly to achieve the bank's medium-term inflation target of 5 percent.

"The Committee will make its decisions in a predictable, data-driven, and transparent framework, decisively using all tools at its disposal to maintain price stability," the central bank concluded. (ILKHA)