Turkish Central Bank keeps interest rates unchanged

By Aysu Bicer

ANKARA (AA) - The Turkish Central Bank on Thursday kept the policy rate constant in line with market expectations.

The bank's policy rate – also known as the one-week repo rate – stands at 17%, the bank said in a statement, noting that additional monetary tightening would be delivered if needed.

"The decelerating impact of the strong monetary tightening implemented in November and December MPC meetings on credit and domestic demand is expected to become more significant," the bank said.

Therefore, it added, the effects of demand and cost factors on inflation are projected to diminish gradually.

A total of 34 economists surveyed by Anadolu Agency on Monday forecast no change in interest rates except for six economists expecting a rise of 50 to 100 basis points in one-week repo rate.

In December, the bank's hike in its benchmark interest rate from 15% to 17% was hailed by markets, seen as showing its determination to fight inflation.

The bank's latest steps to return to orthodoxy in Turkish lira value management have boosted foreign economists' faith in the Central Bank's credibility.

Meanwhile, last month Turkey saw a 14.6% annual hike in consumer prices, according to the country's statistical authority.

The Turkish Central Bank has set a medium-term inflation target of 5%.

Over the course of last year, starting with a rate of 12%, the bank raised its benchmark policy rate a total of 500 basis points.

According to its schedule, the bank will hold twelve MPC meetings this year.