The bank’s monetary policy committee yesterday left its policy rate, i.e., the one-week repo auction rate, at 50 per cent, having last raised it in March.

The underlying trend of inflation posted a slight increase in September. Indicators for the third quarter suggest that domestic demand continues to slow down, approaching disinflationary levels.

While core goods inflation remains low, the improvement in services inflation is expected in the last quarter this year, the central bank said in a release.

The committee noted that inflation expectations and pricing behaviour continue to pose risks to the disinflation process.

The decisiveness regarding tight monetary stance will bring down the underlying trend of monthly inflation through moderation in domestic demand, real appreciation in Turkish lira and improvement in inflation expectations, and consequently, the disinflation process will gain strength, the release said.

The tight monetary stance will be maintained until a significant and sustained decline in the underlying trend of monthly inflation is observed, and inflation expectations converge to the projected forecast range.

In case of unanticipated developments in credit and deposit markets, monetary transmission mechanism will be supported via additional macro-prudential measures, the bank added.

Fibre2Fashion News Desk (DS)