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Turkey Central Bank Keeps Rates On Hold

Turkey’s central bank kept its key rate unchanged on Thursday, after hiking the rates sharply over the last two months.

The Monetary Policy Committee of the Central Bank of the Republic of Turkey governed by Naci Agbal decided to retain the key one-week repo rate at 17.00 percent.

The bank had raised the rate by 475 basis points at the first MPC meeting of Agbal as governor in November and by 200 basis points in the subsequent meeting in December.

Taking into account the end-2021 forecast target, the MPC decided to maintain decisively the tight monetary policy stance for an extended period until strong indicators point to a permanent fall in inflation and price stability, the bank said in a statement.

The bank vowed to take additional monetary tightening if needed.

The two rate hikes have helped to pull Turkey back from the brink of a balance of payments crisis and restored some of the CBRT’s battered credibility, Jason Tuvey, an economist at Capital Economics, said.

As the recovery struggles to make much headway over the coming quarters and inflation remains elevated, the one-week repo rate is likely to be left at 17.00 percent until the end of 2021, the economist noted.

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