Money in Turkey
Turkey - Money
Central Bank stands pat in April but drops its tightening bias
The Central Bank of the Republic of Turkey (CBRT) stood pat at its latest monetary policy meeting on 25 April, leaving the one-week repo rate unchanged at 24.00% for the fifth consecutive meeting. In addition, the Bank sounded notably less hawkish regarding a rate hike in the near future.
The decision to leave the policy rate unchanged reflected a recent drop-off in inflation; in March, inflation fell to its lowest level since August last year after reaching a high of 25.2% in October 2018. However, going forward, the CBRT noted that food prices and import prices are likely to remain elevated, while inflation expectations also appear high, suggesting that inflation won’t fall dramatically in the very near-term. Muhammet Mercan, chief economist at ING, added that “inflation inertia and FX pass-through would be key for the inflation outlook in the period ahead, though the current economic backdrop—with ongoing weakness in domestic demand and base effects—will remain supportive [to the inflation outlook].”
In the CBRT’s meeting press statement, the Bank stated it would maintain its tight stance until marked improvements in inflation are displayed. However, the Bank came off as less hawkish by removing its tightening bias, changing its forward-looking guidance to note that “the monetary stance will be determined to keep inflation in line with the targeted path” instead of “factors affecting inflation will be closely monitored and, if needed, further monetary tightening will be delivered.”
Our panelists see the CBRT loosening its stance later this year as inflation drops off. They see the one-week repo rate ending 2019 at 19.14% and 2020 at 15.05%.
Turkey - Money Data
|Money (annual variation in %)||21.5||11.9||17.4||17.6||15.5|
5 years of economic forecasts for more than 30 economic indicators.
Turkey Money Chart
Source: Central Bank.
|Bond Yield||19.67||-0.09 %||May 13|
|Exchange Rate||6.06||-0.85 %||May 13|
|Stock Market||86,283||1.41 %||May 13|
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May 21, 2019
Consumer sentiment among Turks dropped from 63.5 in April, which marked the best result since August 2018, to 55.3 in May, the lowest level since contemporary records began in 2004.
May 14, 2019
Output in Turkey’s industrial sector fell 2.2% year-on-year in March, up from February’s slightly revised 5.0% drop (previously reported: -5.1% year-on-year).
May 13, 2019
Turkey’s current account deficit narrowed from USD 4.7 billion in March 2018 to USD 589 million in March 2019, which marked the smallest shortfall since November 2018 and an improvement from February’s revised USD 739 million gap (previously reported: USD 718 million deficit).
May 7, 2019
Finance Minister Berat Albayrak outlined much anticipated new policy measures on 11 April in the face of a prolonged downturn in the Turkish economy, characterized by sky-high inflation, high unemployment, an elevated corporate debt burden and a rising stock of non-performing loans.
May 3, 2019
Consumer prices rose 1.69% month-on-month in April in Turkey, up from March’s 1.03% increase.