Turkish central bank keeps interest rates unchanged ahead of election

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Governor of Central Bank of the Republic of Turkey (CBRT), Murat Çetinkaya. AFP PHOTOS

Turkey’s central bank kept its benchmark interest rate on hold on Wednesday, sticking to a promise to stand firm on inflation even as the economy suffers a sharp slowdown in growth, the Financial Times reported.

In its final meeting before critical local elections at the end of March, the bank’s monetary policy committee (PPK) said that its one-week rate repo rate would remain at 24 percent.

Turkey has struggled with sky-high inflation since a meltdown in the lira, which wiped almost 30 percent off the currency versus the dollar last year.

Although annual consumer price inflation has come down from its October peak of 25 percent, it was still 19.7 percent in February.

In a statement accompanying its decision, the PPK said there had been “some improvement” in inflation but added that “risks on price stability continue to prevail.”

It repeated a previous promise to maintain a “tight monetary policy stance” until the inflation outlook showed “significant improvement” and said further hikes could be made if necessary.

Turkey’s central bank governor, Murat Çetinkaya, promised in January that interest rates would remain high until there was a “convincing” fall in inflation, despite an array of economic indicators showing that the economy has entered a recession.

The lira traded at its highs of the day following Wednesday’s decision. The US dollar was recently down on the currency by 0.3 percent, buying 5.36 lira.

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