Turkey’s Central Bank Leaves Main Interest Rates Unchanged

Updated on

Turkey’s central bank left its main interest rates unchanged on Tuesday after a similar decision by the Federal Reserve last week eased concerns that higher U.S. borrowing costs would hurt the Turkish economy. The lira weakened.

The Monetary Policy Committee kept its main one-week repo rate at 7.50 percent, matching the median estimate in a Bloomberg survey of 18 economists. It also kept its overnight lending and borrowing rates at 10.75 percent and 7.25 percent respectively, according to a statement posted on its website.

Policy makers have left the main repo rate on hold since February even as inflation accelerated in August and the lira weakened to a record earlier this month, as government officials urged the central bank not to raise borrowing costs. The bank cited risks to inflation in Tuesday’s statement and vowed to keep lira liquidity in check.

“Considering the impact of the uncertainty in domestic and global markets on inflation expectations, and taking into account the volatility in energy and food prices, the committee decided to maintain the tight liquidity stance as long as deemed necessary,” the bank said.

The lira weakened after the decision and was trading 0.8 percent lower at 3.0310 per dollar at 2:19 p.m.

Consumer prices rose at an annual rate of 7.1 percent through last month, compared to the central bank’s 5 percent target. Governor Erdem Basci has blamed the failure to meet that target on food prices and the weak lira.