Turkey’s central bank left its key interest rate unchanged for the fourth straight meeting, on Thursday, despite inflation exceeding 60 percent.
The Monetary Policy Committee of the Central Bank of the Republic of Turkey, governed by Sahap Kavcioglu, decided to hold the one-week repo rate at 14.00 percent.
Under pressure from President Tayyip Erdogan, the bank had lowered the rate by 500 basis points since September 2021.
In March, consumer price inflation surged to a 20-year high of 61.14 percent, reflecting high commodity prices amid the war in Ukraine.
The central bank today said the disinflation process is set to start on the back of measures taken and decisively pursued for sustainable price and financial stability along with the decline in inflation owing to the base effect and the resolution of the ongoing regional conflict.
Today’s decision by the central bank to keep its one-week repo rate on hold at 14.00 percent suggests there is no appetite among policymakers to move away from their pursuit of a “new economic model” of low real interest rates, Jason Tuvey, an economist at Capital Economics, said.
It would probably take the emergence of severe strains in the banking sector to bring an interest rate hike on to the agenda, the economist said.