"The Monetary Policy Committee (MPC) has decided to increase the policy rate (one-week repo auction rate) from 17 percent to 19 percent" read the statement.
Considering the upside risks to inflation expectations, pricing behaviour and the medium-term inflation outlook associated with these developments, "the MPC has decided to implement a front-loaded and strong additional monetary tightening" the MPC said in the statement, adding that, "The tight monetary policy stance will be maintained decisively, taking into account the end-2021 forecast target, for an extended period until strong indicators point to a permanent fall in inflation and price stability."
In regard to the indicators pointing to a permanent fall in inflation and price stability, indicators for the underlying trend of inflation and pricing behaviour, diffusion indices, demand and cost factors, and inflation expectations would continue to be monitored closely for their compatibility with the targets in the forecast horizon, the MPC said and stated that, additional monetary tightening would be delivered if needed.
"The balance between the monetary policy rate and actual/expected inflation will be sustained decisively to maintain a strong disinflationary effect until permanent price stability and the 5 percent target are reached" read the MPC statement and went on as follows:
"Sustaining the tight monetary policy stance in such a manner, besides attaining permanent price stability, will foster macroeconomic and financial stability positively by facilitating the fall in the country risk premium, the reversal in currency substitution, the accumulation of foreign exchange reserves and the perpetual decline in financing costs.
"In its decision-making process, the CBRT adopts a framework with a medium-term perspective, based on analyzing all factors affecting inflation and the interaction between these factors. It should be emphasized that any new data or information may lead the Committee to revise its stance."