Istanbul, June 30 () - The inflation outlook has yet to display the desired improvement in Turkey, delayed mainly due to the recent exchange rate movements, Central Bank said in a statement on summary of the Monetary Policy Committee Meeting, held on June 23.
The Committee stated that the inflation outlook has yet to display the desired improvement, although a partial correction in food prices is expected to ease inflation in the short term, the recent exchange rate movements have delayed the improvement in core inflation. "This, combined with the uncertainty in global markets and volatility in energy and food prices, makes it necessary to maintain the cautious stance in monetary policy."
The Committee has therefore decided to keep the interest rates at current levels. The Committee has decided to keep the policy rate unchanged at 7.50 percent, on June 23, stating that, the developments made it necessary to maintain the cautious stance in monetary policy.
Future monetary policy decisions would be conditional on the improvements in the inflation outlook, the Committee said. "Inflation expectations, pricing behavior and other factors that affect inflation will be monitored closely and the cautious monetary policy stance will be maintained, by keeping a flat yield curve, until there is a significant improvement in the inflation outlook."
Global markets still posed significant risks, due to reduced predictability of global economy and the increased uncertainties amid the divergence among the monetary policies of advanced economies cause global markets to remain highly data‐sensitive. "Against this background, the volatility in the risk appetite and capital flows continues" the Committee said and underlined that, besides cyclical policies to stabilize capital flows, structural measures to enhance the resilience of the financial system are important as well.
In May, consumer prices increased by 0.56 percent and annual inflation edged up by 0.2 points to 8.09 percent. Annual inflation in food and non-alcoholic beverages fell by 1.55 points to 12.81 percent in May. This fall was mainly driven by unprocessed food prices, and partly by the slowdown in bread and cereal products prices.
