Istanbul / Anadolu Agency

The Turkish Central Bank announced at the Monetary Policy Committee meeting chaired by Fatih Karahan on Thursday that it kept the main interest rate unchanged at 37%.

This decision is part of the Turkish Central Bank's efforts to curb inflation by maintaining a tight monetary policy.

The bank stated in a statement that the overnight lending rate will remain at 40%, while the overnight borrowing rate remained at 35.5%.

The statement noted that the underlying trend of inflation saw a slight decline in June, but preliminary data indicates a possible temporary increase in July.

The statement added that geopolitical tensions have increased uncertainty, leading to a rise in energy prices again, while data showed continued weak domestic demand.

The Central Bank confirmed that it closely monitors the impact of geopolitical developments on inflation through production costs, economic activity, and market expectations.

It stressed that the continuation of tight monetary policy until price stability is achieved will support the path of reducing inflation through demand, exchange rate, and expectations channels.

It explained that interest rate decisions will be made based on inflation developments, its underlying trend, and expectations, ensuring the required level of monetary tightening is maintained.

Turkey's inflation rate in June was 0.99% month-on-month, recording 32.11% year-on-year.

Karahan confirmed that monetary policy decisions will continue to depend on inflation developments, and will be reviewed at each meeting individually, with readiness to tighten monetary policy if a clear and sustained deterioration in inflation expectations occurs.

The Central Bank reiterated its commitment to making decisions that ensure the necessary monetary and financial conditions are in place to reduce inflation to the medium-term target of 5%.

It emphasized that its decisions will remain data-driven, transparent, and predictable, and confirmed that the summary of the Monetary Policy Committee meeting will be published within five working days.

The Central Bank emphasizes its commitment to continued monetary tightening until price stability is achieved, aiming to reduce inflation to 5% in the medium term. Current inflation is attributed to domestic and external factors, including weak domestic demand and high energy prices due to geopolitical tensions. The bank closely monitors the impact of these factors on inflation expectations before making any new interest rate decisions. It is likely that interest rates will remain high in the coming period until inflation declines sustainably.