Turkey Central Bank Keeps Rate Unchanged
Turkey’s central bank kept its key interest rate unchanged on Thursday but cautioned that the rate will be lifted again in case of further deterioration in inflation.
The Monetary Policy Committee of the Central Bank of the Republic of Turkey, or CBRT, headed by Governor Yasar Fatih Karahan decided to hold the policy rate at 50.0 percent.
Previously, the bank had hiked the policy rate by a sharp 500 basis points in March.
Considering the lagged effects of the monetary tightening, the MPC decided to hold the rate but reiterated that it remains highly attentive to inflation risks, the bank said in the statement.
In March, consumer price inflation rose to a 16-month high of 68.5 percent.
The bank said it will maintain the tight monetary stance until a significant and sustained decline in the underlying trend of monthly inflation is observed, and inflation expectations converge to the projected forecast range.
“Monetary policy stance will be tightened in case a significant and persistent deterioration in inflation is foreseen,” the band added.
“While we think the tightening cycle has likely come to an end, with the economy growing strongly and inflation pressures remaining hot, we still don’t expect rates to be cut until next year,” Capital Economics’ economist Liam Peach said.
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