Turkish central bank signals further monetary tightening

Murat Cetinkaya Central Bank Governor

The Turkish Central Bank will closely monitor pricing behaviour and could implement further monetary tightening if necessary, Central Bank Governor Murat Cetinkaya said on Wednesday.

In a speech at a business conference in the western city of Denizli, Cetinkaya also said inflation, which hit double digits in February, was expected to trend downward by the middle of the year with the support of a tight monetary stance.

“Heightened global uncertainty necessitates a cautious monetary policy stance. Accordingly, pricing behaviour will be closely monitored and further monetary tightening will be implemented if necessary,” Cetinkaya said.

The central bank has taken unorthodox monetary tightening steps to tame price rises and defend the Turkish lira after sharp losses at the start of the year, but it has not raised its policy rate since last November..

Cetinkaya also said industrial production data on March 8 showed a continuation of a recovery in economic activity and initial indicators signal a stronger recovery from the second quarter. The central bank’s next policy-setting meeting is on 16 March.