Turkish Central Bank Keeps Interest Rates Unchanged at 17% With Rising Inflation

The Turkish central bank kept the main interest rate at 17% as expected, unchanged for the second month in a row after dramatically raising it twice in order to calm inflation, which rose to 15%.

Since November, the new central bank governor, Naji Iqbal, has raised the repurchase rate (repo) for a week by 675 basis points to lift the pound from an unprecedented low level and deal with annual inflation that has increased in most cases to double in the double digits over the last three years.

Announcing the decision today, the bank said the tightening of policy would continue for a long time and promised to further raise interest rates if needed.

The bank said in a statement after the monthly meeting of its monetary policy committee: “The monetary policy stance that tends to tighten categorically will continue, taking into account the target of late 2021 expectations, for a long time until strong indications point to a permanent decline in inflation and price stability.”

The median forecast in a Reuters poll of 21 economists was that the policy would not change, while five of them expected a rise of up to 18%. Interest rate cuts are expected to begin in Q3, when inflation is expected to subside.