MPC: ​Rates on hold, statement fuzzier

TURKEY - Report 06 May 2021 by Murat Ucer

The Monetary Policy Committee has left the policy rate (one-week repo rate) unchanged at 19% (simple), as expected. Regarding the broader economic environment, today’s statement now recognizes: 1) the resumption of the increase in commodity prices; 2) that the economic activity is still strong, but that domestic demand is losing momentum somewhat, while external demand remains robust; and 3) that an improvement in the current account balance is now underway despite higher commodity prices, thanks to tighter policies, export resilience and deceleration in gold imports. We do not have much to say on these points other than to note that the current account is likely to stay in deficit, albeit a decelerating one, through July.

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