(MENAFN) The Central Bank of Turkey opted to maintain its benchmark one-week repo rate at 50 percent for the second consecutive meeting, aligning with market expectations. In a statement, the bank emphasized its vigilance regarding inflation risks, citing the lagged effects of previous monetary tightening measures. It underscored the importance of closely monitoring economic indicators to ensure price stability while acknowledging the need for a prudent monetary policy stance.

Additionally, the bank announced the termination of the securities maintenance practice as part of efforts to simplify the macroprudential framework and improve market functionality. It pledged to implement further measures to safeguard macro-financial stability and bolster the effectiveness of the monetary transmission mechanism, particularly in light of developments in credit growth and deposits.

Addressing concerns over excess liquidity resulting from heightened demand for Turkish lira financial assets both domestically and internationally, the bank stated its intention to sterilize this liquidity through supplementary measures. This strategic move aims to mitigate potential risks associated with liquidity surges and uphold the stability of the financial system amidst evolving market conditions.

The decision comes against the backdrop of persistently high inflation in Turkey, with the annual inflation rate climbing to 69.8 percent in April from 68.5 percent in the previous month, according to data from the country’s statistical authority. Despite these challenges, the central bank maintains its inflation forecasts of 38 percent by the end of this year and 14 percent for the following year, reflecting its commitment to managing inflationary pressures while fostering sustainable economic growth.

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