The Monetary Policy Committee of the Central Bank emphasized that leading indicators point to a slowdown in consumer inflation in September compared to the previous month.

The Central Bank of the Republic of Turkey (CBRT) published the Summary of the Monetary Policy Committee Meeting last week, where the interest rate was kept at 50%. The summary stated: “Leading indicators suggest seasonal adjusted consumer inflation will slow down in September compared to the previous month. With seasonally adjusted data, it is expected that the monthly inflation of the B and C indicators will remain relatively stable on average.

In September, there is a slight increase observed in the price of basic goods. The monthly services inflation, however, continues to show a high trend. In September, the school return effect stands out on service inflation. With an impact from university fees, prices in transportation services have increased significantly, while the rise in dormitory fees has pushed up the restaurant-hotel subgroup inflation.

In transportation services, price developments, other than school bus fees, are observed to be moderate. It is predicted that the previously declining food prices in August will continue to rise to a limited extent in September. The monthly inflation of processed food has slowed down compared to the previous month, and price increases are moderate across the subgroup.”ENERGY PRICES TO REMAIN STABLE”

As tariff adjustments on managed and directed items in the energy group ended in August, fuel prices are expected to decline in September following global developments. It is considered that the energy prices, which have shown a high increase in the last two months due to managed and directed items, will remain relatively stable in this period. The Committee, while deciding to keep the policy rate unchanged, reiterated its cautious stance against the upward risks on inflation. The resolute stance in monetary policy will help reduce the main trend of monthly inflation and strengthen the disinflation process through rebalancing domestic demand, real appreciation of the Turkish lira, and improvement in inflation expectations.

The tight monetary policy stance will be maintained until a significant and lasting decrease in the main trend of monthly inflation is achieved and inflation expectations approach the targeted range. In the event of a significant and lasting deterioration in inflation, monetary policy tools will be used effectively. “IF NECESSARY, SUPPORTED WITH ADDITIONAL MACROPRUDENTIAL MEASURES”

In case of unexpected developments in credit and deposit markets, the monetary transmission mechanism will be supported with additional macroprudential measures. Liquidity conditions will be closely monitored taking into account potential developments. Sterilization tools will continue to be used effectively. The Committee, considering the delayed effects of monetary tightening in its policy decisions, will determine monetary and financial conditions to reduce the main trend of inflation and achieve the 5% inflation target in the medium term. Inflation and indicators of the main trend of inflation will be closely monitored, and the Committee will decisively use all instruments at its disposal in line with its primary goal of price stability.”