Turkey’s Central Bank Leaves All Main Interest Rates Unchangedby
Bank pledges to keep monetary policy, liquidity tight
Bank says weak lira delaying reduction in core inflation
Turkey’s central bank left all its main interest rates unchanged on Tuesday and said policy makers would keep liquidity tight as the weak lira is delaying a reduction in core inflation.
The bank 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.
It was the first decision since the ruling AK Party, which has become increasingly vocal in its accusation that the central bank is stymieing economic growth with high interest rates, won a decisive parliamentary election earlier this month. The bank said monetary policy decisions would depend on the inflation outlook, pledging to keep lira liquidity tight “as long as necessary,” citing volatility in energy and food prices.
Policy makers have left the main repo rate on hold since February even as consumer inflation is hovering above 7 percent, compared with the bank’s 5 percent target. Governor Erdem Basci said last month that it was “reasonable” to expect the bank to increase interest rates in its first meeting after the U.S. Federal Reserve raises lending costs.
The lira was trading 0.8 percent lower 2.8716 per dollar at 2:04 p.m. in Istanbul.