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Turkey CB Holds Key Rate Unchanged Third Time

Turkey's central bank left its key interest rate unchanged for a third consecutive session after the massive hike in September.

The Monetary Policy Committee, led by Governor Murat Cetinkaya, decided to keep the policy rate unchanged at 24 percent, the TCMB said in a statement. The decision was in line with economists' expectations.

"While developments in import prices and domestic demand conditions have led to some improvement in the inflation outlook, risks on price stability continue to prevail," the bank said.

"Accordingly, the Committee has decided to maintain the tight monetary policy stance until inflation outlook displays a significant improvement."

In September, the rate was raised from 17.75 percent despite strong pressure from the government to reduce them.

The bank said recently released data showed that rebalancing trend in the economy has become more noticeable.

External demand remains strong, while slowdown in economic activity continues, partly due to tight financial conditions, the bank added.

Current account balance is expected to maintain its improving trend, the TCMB added.

The central bank asserted that it inflation developments would be monitored closely and further monetary easing will be delivered, if needed.

"Risks for inflation remain tilted to the upside - with the marked deterioration in pricing behaviour, vulnerability to shifts in global risk appetite and the upcoming elections creating concerns for fiscal policy all keeping the CBT cautious in the near term," ING economist Muhammet Mercan said.

Headline inflation slowed for a second straight month to 20.3 percent in December. Inflation had peaked at 25.24 percent in October.

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