The Central Bank of the Republic of Turkey (CBRT) announced its policy decision this Thursday and left the one-week repo rate unchanged at 14%, in line with the market expectations. 

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Market reaction

The Turkish lira moved little in reaction to the announcement, with the USD/TRY hovering near the lower end of a one-week-old trading range, below mid-13.00s.

Key takeaways from the accompanying policy statement:

• A comprehensive review of the policy framework is being conducted with the aim of prioritizing the Turkish lira in all policy tools.
• Expect the disinflation process to start on the back of measures taken.
• Seeing sustainable price and financial stability along with the decline in inflation owing to the base effect.
• Inflation in the recent period has been driven by distorted pricing behaviour due to unhealthy price formations in fx.
• Inflation is also affected by supply-side factors, commodities.
• The cumulative impact of the recent policy decisions being monitored.
• held steady below mid-13.00s, well within a narrow.