An eye on inflation: Turkey holds tight After raising rates to 46%

The Central Bank of Turkey announced on Friday that it will maintain its tight monetary stance until inflation shows a sustained and meaningful decline. 

The statement follows last Thursday’s decision to raise the policy rate to 46%, a move aimed at reinforcing the country's disinflation efforts.

According to the minutes from the latest Monetary Policy Committee meeting, signs of progress are emerging. Policymakers cited a slowdown in domestic demand, a stronger Turkish lira, and improved inflation expectations as early indicators that the disinflation process is gaining traction.

In a bid to strengthen monetary transmission and bolster market stability, the central bank also confirmed the resumption of one-week repo auctions. Additional measures were introduced to address recent market volatility and ensure that policy changes more effectively influence financial conditions.

Despite these encouraging signals, the central bank stressed that it would remain cautious, signaling that monetary tightening will stay in place until inflation data clearly and consistently confirms a downward trend.

The Turkish economy has grappled with persistently high inflation in recent years, and the latest moves suggest that authorities are determined to anchor expectations and restore price stability over the medium term.