The Central Bank kept the interest rate at 50 percent.

The Monetary Policy Committee of the Central Bank of the Republic of Turkey, chaired by Central Bank Governor Fatih Karahan, met once again as usual. The interest rate decision for the month of June was announced after the meeting.

INTEREST RATE KEPT UNCHANGED

Economists' expectations were that the interest rate would be kept unchanged. In May, the Central Bank also kept the policy rate unchanged at 50 percent, in line with expectations. According to the decision of the committee, the interest rate for May was also kept unchanged at 50 percent.

"THE WEAKNESS IN INFLATION HAS EXPERIENCED A TEMPORARY INTERRUPTION IN MAY"

In the statement made after the meeting, it was stated that "The Monetary Policy Committee has decided to keep the policy rate, which is the one-week repo auction interest rate, unchanged at 50 percent. The weakness in the underlying trend of monthly inflation has experienced a temporary interruption in May. Indicators for the recent period confirm that domestic demand, although still at an inflationary level, has slowed down. The high trend and rigidity in service inflation, inflation expectations, geopolitical risks, and food prices keep inflationary pressures alive. The Committee closely monitors inflation expectations and pricing behaviors with forecasts.

"DISINFLATION WILL BE ESTABLISHED IN THE SECOND HALF OF THE YEAR"

The effects of monetary tightening on loans and domestic demand are closely monitored. While the Committee has decided to keep the policy rate unchanged, taking into account the delayed effects of monetary tightening, it has reiterated its cautious stance against upward risks on inflation. A tight monetary policy stance will be maintained until a significant and permanent decrease is achieved in the underlying trend of monthly inflation and inflation expectations approach the targeted range. In the event of a significant and permanent deterioration in inflation, the monetary policy stance will be tightened. The determined stance in monetary policy will reduce the underlying trend of monthly inflation and establish disinflation in the second half of the year through the balance in domestic demand, real appreciation of the Turkish lira, and improvement in inflation expectations.

"LIQUIDITY DEVELOPMENTS ARE CLOSELY MONITORED"

If there are developments in credit and deposit markets that are different from those expected, the monetary transmission mechanism will be supported with additional macro-prudential steps. Liquidity developments are closely monitored. Sterilization tools will be effectively used by diversifying them when necessary. The Committee will determine the monetary and financial conditions that will reduce the underlying trend of inflation and achieve the inflation target of 5 percent in the medium term, taking into account the delayed effects of monetary tightening. Indicators for inflation and the underlying trend of inflation will be closely monitored, and the Committee will use all available tools in a determined manner in line with the main objective of price stability. The Committee will make its decisions in a predictable, data-driven, and transparent framework. The Summary of the Monetary Policy Committee Meeting will be published within five business days."