Central Bank keeps rate on hold for seventh straight month

As widely expected, Türkiye's Central Bank has extended its interest-rate pause for a seventh straight month.

The bank will keep the policy rate, the one-week repo auction rate, unchanged at 50 percent.

The tight monetary stance will be maintained until a significant and sustained decline in the underlying trend of monthly inflation is observed, and inflation expectations converge to the projected forecast range, the bank said in a statement released after the Monetary Policy Committee meeting on Oct. 17.

The decisiveness regarding tight monetary stance will bring down the underlying trend of monthly inflation through moderation in domestic demand, real appreciation in Turkish lira, and improvement in inflation expectations, it said.

Consequently, the disinflation process will gain strength, according to the bank.

"The committee decided to keep the policy rate unchanged but reiterated that it remains highly attentive to inflation risks," said the bank, adding that monetary policy tools will be used effectively in case a significant and persistent deterioration in inflation is foreseen.

Indicators for the third quarter suggest that domestic demand continues to slow down, approaching disinflationary levels, it noted.

[HH] Uncertainties and risks

The uncertainty regarding the pace of improvement in inflation has increased in light of incoming data, it said.

The bank underlined that in September, the underlying trend of inflation posted a slight increase.

The annual inflation slowed from 51.97 percent in August to 49.38 percent in September, which was higher than expected. Consumer prices advanced 2.97 percent month-on-month, accelerating from the 2.47 percent increase in the previous month.