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Istanbul, June 23 () - Central Bank of Turkey's Monetary Policy Committee (MPC) has decided to keep the policy rate unchanged at 7.50 percent, as expected. The MPC stated that, the developments made it necessary to maintain the cautious stance in monetary policy.

The Committee also kept short term rates unchanged, marginal funding rate at 10.25 percent, the interest rate on borrowing facilities provided for primary dealers via repo transactions at 10.75 percent, and borrowing rate at 7.25 percent, said in the statement released by the Central Bank on Tuesday.

Loan growth continued at reasonable levels in response to the tight monetary policy stance and macroprudential measures, the MPC said. "The favorable developments in the terms of trade and the moderate course of consumer loans contribute to the improvement in the current account balance."

External demand remained weak, while domestic demand contributes to growth moderately, it added. "The Committee assesses that the implementation of the announced structural reforms would contribute to the potential growth significantly. Inflation is expected to decline in the short term owing to a partial correction in food prices."

Recent movements in the exchange rates had delayed the improvement in the core indicators, the MPC underlined. "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."

Future monetary policy decisions would be conditional on the improvements in the inflation outlook, the MPC stated. Inflation expectations, pricing behavior and other factors that affect inflation would 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.