July 22 (SeeNews) - Turkey's central bank said it decided to keep its one-week repo rate unchanged at 19%.
"The strong recovery in the global demand, increasing trend of commodity prices, supply constraints in some sectors and the rise in transportation costs have led to producer and consumer price increases internationally. The effects of the rising global inflation and inflation expectations on international financial markets remain significant," the central bank said in a statement last week.
Taking into account the high levels of inflation and inflation expectations, the current tight monetary policy stance will be maintained decisively until the significant fall in the April Inflation Report’s forecast path is achieved, the central bank said.
According to the central bank, while domestic demand has slightly decelerated in the second quarter of 2021 due to coronavirus pandemic restrictions and the tightening in financial conditions, external demand remains strong. "The acceleration of domestic vaccination rollout facilitates the recovery in services and tourism sectors, which have been adversely affected by the pandemic, and leads to a more balanced composition in economic activity," the financial institution noted.
The bank also said that the current account is expected to post a surplus in the rest of the year due to the strong upward trend in exports, and the strong progress in the vaccination program stimulating tourism activities.
The central bank last changed its policy rate in March, increasing it to 19% from 17% to eliminate risks to the inflation outlook.
According to the most recent data published by TurkStat, the consumer price index (CPI) rose 17.53% year-on-year in June, after increasing by an annual 16.59% in the previous month. Turkey's consumer prices went up by 1.94% month-on-month in June, following a 0.89% increase in May.