Turkish central bank keeps main interest rate unchanged

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Turkey's Central Bank headquarters is seen in Ankara.

The Turkish central bank on Thursday kept its main interest rate unchanged, in line with market expectations after an unexpectedly aggressive hike last month, AFP reported.

The bank said in a statement that it would keep the one-week repo rate unchanged at 24 percent, following a 625 basis points (6.25 percentage points) rise on Sept. 13.

Since the bank’s decision was expected, the Turkish lira reacted well to the move and was at 5.63 to the US dollar, gaining nearly 1 percent in value towards 1130 GMT.

Following a bitter spat over the detention of an American pastor in Turkey, the lira lost 25 percent against the greenback in August.

But after the previous stunning rate hike and pastor Andrew Brunson’s release on Oct. 12, the lira has since rallied — although concerns over inflation remain.

Annual inflation was 24.52 percent in September, up from 17.90 percent in August, according to data released in early October.

The central bank sought to show that it was committed to maintaining price stability despite the decision to keep its policy rate constant.

“The tight stance in monetary policy will be maintained decisively until the inflation outlook displays a significant improvement,” the bank said in a statement.

Economists and investors have been concerned over domestic monetary policy in Turkey as President Recep Tayyip Erdoğan slams high interest rates, going against economic orthodoxy to claim they cause high inflation.

He also previously said high interest rates were the “mother and father of all evil.”

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