Recent data releases suggest that economic activity continues to recover with the support of domestic demand. However, it would take a long time before industrial capacity utilization rates return to their pre-crisis levels, due to weak external demand outlook.
Although employment conditions continue to improve, unemployment rates remain at high levels.
it is expected that inflation would be on a declining path in the forthcoming period, while core inflation indicators would remain consistent with the medium-term targets.
the Committee has reiterated that it would be necessary to maintain the policy rate at current levels for some time, and to keep it at low levels for a long period.
Recent surge in capital inflows exacerbates the divergence between the growth rates of domestic and external demand, widening the current account deficit through rapid credit growth and increasing import demand and thus highlighting the risks regarding financial stability.
the Committee has decided to widen the gap between lending and borrowing rates by reducing the borrowing rates by 400 basis points. Moreover, observing the favorable developments in credit conditions, the Committee has indicated that it would be appropriate to proceed with the remaining measures outlined in the exit strategy.
the Committee has decided to allow overnight interest rates to diverge from the policy rate temporarily, when needed.