Central Bank of the Rupblic of Turkey - Credit Bloomberg

Asset management Economy

Turkey Central Bank vows monetary policy action against forex moves

  • share this article

The central bank plans to hold eight monetary policy meetings in 2019, unchanged from 2018 and its set to hold its next monetary policy meeting on 13 December.

Wednesday 05, December 2018

(Bloomberg) --Turkey’s central bank said it will revise its monetary policy stance if foreign-exchange fluctuations have long-lasting effects on price stability. The lira jumped.

The central bank will not remain indifferent if “the exchange rates are at odds with economic fundamentals,” the lender said Wednesday in its “Monetary and Exchange Rate Policy for 2019” document published on its website. In last year’s text, the bank said it would react as needed with its instruments to foreign-exchange movements, without mentioning a possible change in its monetary policy stance.

The Turkish central bank “has woken up...finally,” Tim Ash, BlueBay Asset Management strategist, said after the report, while adding it needs to be even more proactive.

“Verbal intervention is a major part of any central bank’s policy armour,” Ash said. “They cannot always wait for the signal to act from above, they need to make decisions themselves.”   Turkey’s lira erased its loss against the dollar after the central bank report. It traded 0.6 per cent higher at 5.3563 to the dollar at 12:03 p.m. in Istanbul after earlier sliding as much as one per cent.   The bank kept its inflation target intact at five per cent, plus or minus two percentage points in each direction. Its end-2018 inflation estimate is 23.5 per cent.         

TAGS : CBRT, Lira, Monetary policy

print this article