“The current level of the base rate and maintaining loose monetary conditions for an extended period, over a longer horizon than expected, are consistent with the medium-term achievement of the inflation target”, the bank said in a statement on its website.
Advertisement
The bank also said that the inflation outlook was the key factor in the decision.
Turkey’s central bank left interest rates unchanged yesterday, after the US Federal Reserve held fire citing concern over emerging economies, but analysts say the bank will have to hike rates eventually to support the sliding lira and curb inflation. The decision was widely expected after rate-setters clearly signalled an end to an easing cycle at their monthly policy meeting two months ago. The lira is down 22% this year. “Additional easing could take the form of further policy rate cuts and/or a revamped “Funding for Growth” plan, the central bank’s credit program to boost lending”, she added. Earlier this month it touched an all-time low of 3.0699 per dollar. Benchmark two-year bond yields were at 11.24%, having already weakened from 11.17% since Monday, while the main BIST-100 Stock Index more than doubled its losses to as much as 1.3% for the day.
The Monetary Policy Committee of the Turkish central bank chose to retain the one-week repo rate at 7.5 percent.
The bank’s decision had been forecast by most analysts.
“Markets may run out of patience again”, said Luis Costa, emerging market strategist at Citigroup Inc.in London.
The Monetary Policy Committee (MPC) is meeting to decide whether the rate should be increased, which is bad news for consumers with debt. Central Bank of the Republic of China (Taiwan) Governor Fai-nan Perng speaks in the parliament on macro-economy – 0100 GMT. That is seen as increasing the likelihood that emerging markets such as Turkey would have to follow suit to defend their currencies against a surging dollar.
Advertisement
President Tayyip Erdogan has repeatedly called for interest rate cuts and even equated high rates with treason. SATURDAY, SEPTEMBER 26 CHISINAU – National Bank of Moldova holds monetary policy meeting.
