CBRT keeps the policy rate constant at 19 percent

"The Monetary Policy Committee (MPC) has decided to keep the policy rate (one-week repo auction rate) constant at 19 percent" read the statement.

"Demand and cost factors, supply constraints in some sectors, and high levels of inflation expectations continue to pose risks to the pricing behaviour and inflation outlook" read the statement and added:

"The decelerating impact of the current monetary stance on credit and domestic demand is envisaged to become more significant in the upcoming period. Accordingly, the MPC has decided to maintain the tight monetary policy stance by keeping the policy rate unchanged."

The CBRT would continue to use decisively all available instruments in pursuit of the primary objective of price stability and the policy rate would continue to be determined at a level above inflation to maintain a strong disinflationary effect until strong indicators point to a permanent fall in inflation and the medium-term 5 percent target is reached, according to the statement.

"The stability in the general price level will foster macroeconomic stability and financial stability positively through the fall in the country risk premium, a reversal in currency substitution, accumulation of foreign exchange reserves and perpetual decline in financing costs. This would create a viable foundation for investment, production and employment to continue growing in a healthy and sustainable way" read the statement.

The global economy, having contracted sharply in 2020 due to the pandemic, continues to recover on the back of accommodative policies and positive developments in the vaccination process, said in the statement and added:

"This improvement process is determined especially by the acceleration in manufacturing industry activity and global trade. While the upward trend in commodity prices has decelerated, the effects of the rising global inflation expectations on international financial markets remain significant."