Turkish central bank signals further monetary tightening if necessary

Istanbul, Mar 8 (DHA) - The Turkish Central Bank will closely monitor pricing behavior and could implement further monetary tightening if necessary, Central Bank Governor Murat Çetinkaya said on Wednesday.
In a speech at a business conference in the western city of Denizli, Çetinkaya 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 behavior will be closely monitored and further monetary tightening will be implemented if necessary” Çetinkaya said.
The central bank has taken unorthodox monetary tightening steps to tame price rises and defend the lira after sharp losses at the start of the year, but it has not raised its policy rate since last November. Its next policy-setting meeting is on March 16.
Over the last week it has tightened liquidity to pushed the average cost of funding up by 20-25 basis points against a background of rising inflation and U.S. Federal Reserve rate hike expectations.
Çetinkaya 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.