The committee's analysis indicates that domestic demand continues to slow down in the third quarter of 2024, contributing to a reduction in the inflationary impact. Goods inflation is showing a downward trend; however, the high level of inflation expectations and geopolitical developments are sustaining inflationary risks. The committee underscored the increasing importance of aligning inflation expectations and pricing behavior with projections to support the disinflation process, the Central Bank of the Republic of Turkiye said in a press release.

The Monetary Policy Committee reaffirmed its commitment to a tight monetary stance, which it believes will curb the underlying trend of monthly inflation. This approach is expected to moderate domestic demand, strengthen the Turkish lira, and improve inflation expectations, thereby reinforcing the disinflation process.

Considering the delayed effects of previous monetary tightening, the committee opted to keep the policy rate unchanged but reiterated its heightened vigilance towards inflation risks. The current tight monetary stance will be maintained until a significant and sustained reduction in the underlying trend of monthly inflation is achieved, and inflation expectations align with the projected forecast range. The committee also indicated that it is prepared to tighten monetary policy further if a significant and persistent deterioration in inflation is anticipated.

In response to potential unforeseen developments in credit and deposit markets, the committee is prepared to bolster the monetary transmission mechanism through additional macroprudential measures. It continues to assess liquidity conditions in light of future developments and will employ sterilisation tools effectively, the release added.

Looking forward, the committee will make policy decisions aimed at fostering the necessary monetary and financial conditions to ensure a decline in the underlying trend of inflation, with the goal of reaching a 5 per cent inflation target in the medium term. The committee will closely monitor indicators of inflation and the underlying trend, and it remains committed to decisively using all tools at its disposal to achieve price stability.

Fibre2Fashion News Desk (DP)