ANKARA: Turkey's central bank on Thursday left interest rates unchanged as it keeps a watchful eye on inflation despite government pressure for a sharp cut.
The bank said in a statement after its latest monetary policy meeting that the one-week repurchase rate would remain at 8.25 percent and the marginal funding rate at 11.25 percent.
In January, the bank, which is nominally independent, had aggressively raised key rates in a bid to stop a steep drop in the value of the lira.
Concerned about weakening growth, the government has repeatedly pressed for cuts to bring rates back to their pre-January levels.
The bank responded by lightly trimming rates -- but not as aggressively as the government had hoped. At its last meeting in August, it pruned other rates but kept the headline one week repurchase rate unchanged.
The Turkish economy, vulnerable to external shocks, sharply slowed to 2.1 percent growth in the second quarter, partly because of the rate hikes to shore up the lira.
President Recep Tayyip Erdogan's repeated calls on the bank for an aggressive rate cut to stimulate growth has generated questions over its independence and credibility while economists have warned this could trigger price pressure, with surging inflation.
The bank said Thursday the tight monetary policy would be maintained until a visible improvement in inflation outlook.
"The tight monetary policy stance started to have favourable impact on the core inflation trend," the bank said in its accompanying statement.
But it added: "Elevated food prices continue to delay the improvement in the inflation outlook."
"Inflation expectations... will be closely monitored and the tight monetary policy stance will be maintained," it said.
Turkey's inflation surged to 9.54 percent in August, much higher than the central bank's year-end target of 7.6 percent.
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