UPDATE - Turkey's Central Bank keeps interest rates steady

UPDATED WITH MORE DETAILS, CHANGES DECK

By Tuba Sahin

ANKARA (AA) – Turkey’s Central Bank on Thursday kept its one-week repo rate – also known as the policy rate – steady at 10.25%.

In a statement, the bank's Monetary Policy Committee said it decided to increase flexibility in liquidity management as well as continue liquidity measures until significant improvement is achieved in the inflation outlook.

The committee also decided to set the margin between the Late Liquidity Window lending rate and overnight lending rate at 300 basis points.

Noting that an expected moderation in imports has started, the bank projected a strong recovery in exports, relatively low commodity prices, and the leveling of the real exchange rate will support the current account balance in the upcoming period.

The bank underlined that inflation followed a higher-than-envisaged path on the back of Turkey’s fast economic recovery with strong credit momentum as well as financial market developments.

"A significant tightening in financial conditions has been achieved, following the monetary policy and liquidity management steps taken to contain inflation expectations and risks to the inflation outlook," it added.

An Anadolu Agency survey last week found that a group of 17 economists expected a rise in the one-week repo rate ranging between 100 and 200 basis points.

Last month, in a month that also took markets by surprise, the Central Bank raised its one-week repo rate by 200 basis points from 8.25% to 10.25%.

Last year, in eight meetings, the bank cut the rate by a total of 1,200 basis points from 24%.

After holding eight meetings last year, this year the bank boosted the number of MPC meetings to 12.