Turkey Central Bank Keeps Rate On Hold

Turkey's central bank retained its key interest rate, as widely expected, for the fourth straight meeting on Wednesday.

The Monetary Policy Committee of the Central Bank of the Republic of Turkey governed by Sahap Kavcioglu, decided to hold the key one-week repo rate at 19.00 percent.

The bank had lifted the interest rates by 200 basis points at the March meeting under the leadership of former governor Naci Agbal.

The bank repeatedly said that taking into account the high levels of inflation and inflation expectations, the current tight monetary policy stance will be maintained decisively until the significant fall in the April Inflation Report's forecast path is achieved.

The central bank reiterated that it will continue to use decisively all available instruments in pursuit of the primary objective of price stability.

The policy rate will continue to be determined at a level above inflation to maintain a strong disinflationary effect until strong indicators point to a permanent fall in inflation and the medium-term 5 percent target is reached, the bank said.

An easing cycle is now unlikely to commence until late this year when inflation looks set to fall sharply as the effects of previous falls in the lira start to unwind, Jason Tuvey, an economist at Capital Economics, said.

The bank forecast one-week repo rate to end this year at 17.00 percent and to be lowered to 12.00 percent by end-2022.

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