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Türkiye’s central bank is committed to maintaining a tight monetary policy to sustain the disinflationary momentum, its Governor Fatih Karahan said on Wednesday.
“We will set the policy rate at a level that ensures the tightness required by the projected disinflation path, considering inflation realizations and expectations,” Karahan told a meeting with the Istanbul Chamber of Industry (ISO).
The bank has held its policy rate steady at 50% since March, when it raised its policy rate by 500 basis points to round off an aggressive tightening cycle that started in June last year to rein in soaring inflation.
Karahan’s remark marked a repetition of a statement by the central bank following its last policy-setting meeting a week ago when it said it remained attentive to inflation risks, while analysts said its comments opened the way for a possible rate cut in December.
In a change of messaging in September, the bank began setting the stage for a rate cut by dropping a reference to potential further tightening, but it has continued to voice caution on inflation.
Tight monetary policy, fiscal measures and base effects brought annual inflation down to 48.58% in October from a peak of 75.45% in May.
The tight stance will be maintained until a notable decrease is ensured in the main trend of monthly inflation, Karahan said on Wednesday.
He earlier said the policy would remain tight even when a rate-cutting cycle started, and that keeping the current interest rate amid improving inflation expectations would amount to a tightening.
Earlier this month, the central bank raised its year-end inflation forecasts for this year and next to 44% and 21%, respectively. It previously forecast year-end inflation of 38% in 2024 and 14% next year.
The government anticipated end-2024 and end-2025 inflation of 41.5% and 17.5%, respectively.
