The Central Bank of the Republic of Turkey (CBRT) will continue to effectively use all policy instruments at hand to maintain price stability in 2019, according to its new fiscal policy for the new year announced Wednesday.
The CBRT said in its Monetary and Exchange Rate Policy for 2019 that its Monetary Policy Committee (MPC) will meet eight times a year in line with the schedule announced earlier in the year — Jan. 11, March 13, April 30, June 19, July 31, Sept. 19, Oct. 31, and Dec. 19.
The bank will keep one-week repo auctions as its main funding instrument, and will also keep implementing the floating exchange rate regime, according to the report.
Depending on the loss of market depth, the CBRT will be able to intervene directly or indirectly through flexible tenders in case of unhealthy price formation in exchange rates and excessive volatility.
"If the exchange rate movements permanently affect price stability, the CBRT will change its monetary policy stance and give the necessary reaction," it said.
The bank also kept its [mid-term] inflation target at 5 percent as per the agreement reached with the government.
".....the first objective is to bring down inflation to single digits, and then gradually reduce inflation further to stabilize it around 5 percent."
Highlighting the importance of fiscal discipline to fight inflation, the bank said the coordination between the monetary policy and the fiscal policy is crucial with respect to disinflation and macroeconomic rebalancing.
Under the country's new economic program announced on Sept. 20, the inflation target for this year is 20.8 percent, 15.9 percent for 2019, 9.8 percent for 2020, and 6 percent for 2021.
In September, the Treasury and Finance Ministry launched an "all-out war" on inflation with a set of measures to limit extreme increases in consumer prices.
Over the past five years, annual inflation saw its lowest level in April 2013, with 6.13 percent, and its highest level this October.