The minutes of the Monetary Policy Committee meeting held on Jan. 19 made comments as follows:
“Evaluating assumptions underlying the inflation forecasts and the course of exogenous variables, an upward revision was made to the end-2016 inflation forecast, in consideration of the effects of the revisions in the Turkish lira-denominated import and oil prices, administered price adjustments announced in January and minimum wage arrangements.”
The minutes underlined that core inflation remained high due to the lagged effects of the cumulative depreciation of lira.
“As the minimum-wage adjustment passes through to overall wages, cost and demand pressures on inflation stemming from wages are likely to increase in the upcoming period” added the minutes.
In this perspective, the committee has vowed tight stance in liquidity policies “as long as deemed necessary” considering “the impact of wage developments and the uncertainties in global markets on inflation expectations and pricing behavior, and taking into account the volatility in energy and unprocessed food prices”.