Turkey central bank keeps key rates unchanged



Turkey’s central bank unexpectedly kept all of its three main interest rates unchanged, and said a “cautious monetary policy” would be maintained as it assesses the impact of a weaker lira on inflation. The lira reversed gains.
The bank kept one-week repurchase, overnight lending and borrowing rates unchanged at 8 percent, 8.5 percent and 7.25 percent respectively, it said in a statement on Tuesday. Economists surveyed by Bloomberg forecast a 25-basis point increase to the overnight lending rate and no change to the other two.
Central bank Governor Murat Cetinkaya said this month that he would likely wait to determine whether the currency weakness would have a temporary or long-term impact on inflation before rushing into policy action. Inflation stood at 7 percent last month, compared with the bank’s 5 percent target.
“Exchange-rate movements due to recently heightened global uncertainty” pose inflationary risks, the bank said in the statement. “Yet, the aggregate demand developments restrain these effects. Developments will be closely monitored in order to make a sound assessment regarding the net impact of these factors.”

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