Türkiye keeps interest rates at 50%, matching forecast

By Tuba Ongun

Türkiye's Central Bank on Thursday held the benchmark one-week repo rate stable at 50% for the third straight meeting, as expected.

"Considering the lagged effects of the monetary tightening, the (Monetary Policy) Committee decided to keep the policy rate unchanged, but reiterated that it remains highly attentive to inflation risks," the bank said in a statement.

The decline in the underlying trend of monthly inflation saw a temporary pause in May, read the statement.

Türkiye's annual inflation rate accelerated to 75.45% in May, the highest since November 2022, according to latest data from Turkish Statistical Institute.

Noting that domestic demand continues to slow, the bank said: "In addition to the high level of and the stickiness in services inflation, inflation expectations, geopolitical risks, and food prices keep inflationary pressures alive. The Committee closely monitors the alignment of inflation expectations and pricing behavior with projections."

The Central Bank also changed the dates of the next two monetary policy meetings to July 23 and Aug. 20 due to the schedule of its governor.

Turkish officials have signalled that a downward trend in inflation may begin around June.