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Central Bank: Strengthening the Disinflation Process

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The Central Bank announced that the disinflation process will strengthen with the real appreciation of the Turkish Lira and an improvement in inflation expectations. The summary of the Central Bank’s Monetary Policy Committee (MPC) meeting was published. In the statement made by the CBRT, it was noted that the consistent stance in monetary policy has strengthened the disinflation process through balancing domestic demand, real appreciation of the Turkish Lira, and improvement in inflation expectations. The following statements were used in the announcement by the CBRT: “Increased coordination of fiscal policy will also make a significant contribution to this process. A tight monetary policy stance will be maintained until a permanent decrease in inflation and price stability are achieved. The policy rate will be determined to provide the necessary tightness required by the projected disinflation process, taking into account inflation developments, main trends, and expectations. The Committee will determine the steps to be taken regarding the policy rate with a focus on the inflation outlook, in a prudent and meeting-by-meeting approach. In case of a significant and persistent deterioration in inflation expectations, monetary policy tools will be effectively used. Additional steps have been taken to preserve macrofinancial stability and support a tight monetary stance, considering recent developments in credit growth. If there are unforeseen developments in credit and deposit markets, the monetary transmission mechanism will be supported with additional macroprudential measures. Liquidity conditions will continue to be closely monitored, and sterilization tools will be effectively utilized. While inflation expectations and pricing behaviors show signs of improvement, they continue to pose a risk factor for the disinflation process.

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