Turkey’s central bank to maintain tight policy

Reuters

Turkey’s central bank said it will keep monetary policy tight until the inflation outlook displays a significant improvement, after it kept rates steady for the third straight meeting. Current elevated levels of inflation and developments in core inflation indicators pose risks to pricing behaviour and the bank would deliver further monetary tightening if needed, it said. It kept all four of its policy rates on hold, as expected.
Annual inflation last month rose back up into double digits, underscoring the difficulty the bank faces in balancing its fight to keep price pressures under control against demands for cheap credit from President Tayyip Erdogan.
The bank has used unorthodox moves to tighten policy, heightening the perception it wants to avoid conventional rate hikes in the face of Erdogan’s often stated opposition to high interest rates.