CBRT stays on hold, as expected

At its meeting today, the Turkish central bank (CBRT) left its monetary conditions unchanged, matching the broad consensus.

In fact, the CBRT left the Overnight Marginal Funding rate at 9.25%, the Overnight Marginal Borrowing Rate at 8.0% and the One-Week Repo Rate at 7.25%. The central bank, however, raised the Late Liquidity Window (between 4pm and 5pm) to 11.75% from 11.00%.

The CBRT expects the economic recovery to continue at a moderate pace, while demand from the EU has contributed positively to the exports sector although the domestic demand stays somewhat subdued.

Regarding the recent pick up in inflation, the central bank said “Cost push pressures and the volatility in food prices in recent months have led to a sharp increase in inflation. The significant rise in inflation is expected to continue in the short term due to lagged pass‐through and the base effect in food prices”.

Finally, the CBRT left the door open for further tightening if needed.