ANKARA (AA) – Turkey’s Central Bank on Thursday held key interest rates at their current levels after reducing its main interest rate over the last seven months.
The one-week repo rate will be kept at 7.50 percent while the borrowing rate will remain at 7.25 percent, in line with expectations. The overnight lending rate will be stay at 8.25 percent, according to the bank’s Monetary Policy Committee.
"Recently released data and indicators regarding the third-quarter display a deceleration in economic activity. Reduced tightness in monetary conditions and the recent macroprudential measures support the overall financial conditions," read a statement on Thursday.
The bank's move came after Turkish presidential economic advisor Yigit Bulut said earlier this week the central bank could pause a cycle of interest-rate cuts if warranted by economic conditions.
The body also said on Thursday: "The lagged effects of the terms of trade developments and the moderate course of consumer loans limit the widening in the current account balance driven by the decline in tourism revenues.
“Demand from the EU economies continues to contribute positively to exports. With the supportive measures and incentives provided recently, domestic demand is expected to recover starting from the final quarter."
The slowdown in aggregate demand contributed to the gradual fall in core inflation, the bank said. "The Committee assesses that the implementation of the structural reforms would contribute to potential growth significantly."
"Yet, the recent developments in exchange rates and other cost factors restrain the improvement in inflation outlook and thus necessitate the maintenance of a cautious monetary policy stance," it added.
The bank said its future monetary policy decisions would depend on the inflation outlook.
After the central bank decision, the Turkish lira recovered against the U.S. dollar to 3.0516 from 3.0730 lira, up 0.70 percent.