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Turkey CB Unlikely To Loosen Policy This Year As Inflation Stays Above Target

Turkey's central bank is unlikely to loosen its current monetary policy over the course of this year as inflation remains well above the target, William Jackson, an economist at Capital Economics, said.

Annual inflation remained broadly stable at 10.3 percent in February, the Turkish Statistical Institute reported on March 5.

At the Wednesday's rate-setting meeting, policymakers are likely to stick to its hawkish tone, he noted.

Looking ahead, inflation should decline in the coming months. "But we doubt that will prompt a shift in the MPC's recent hawkish stance," Jackson pointed out.

He added that policymakers appear increasingly concerned by the strength of inflation and high inflation expectations.

"We expect the average cost of liquidity provision - the best measure of overall monetary conditions - to remain at its current level of 12.75 percent over the course of this year," Capital Economics concluded.

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