ISTANBUL: Turkey's central bank held its policy rate steady at 14% on Thursday, as expected, halting an easing cycle that sparked a currency crisis and that sent inflation soaring to a 19-year high late last year.
The bank said it would monitor the impact of its previous policy decisions and expects the "disinflation process to start on the back of measures taken for sustainable price and financial stability..."
Under pressure from President Tayyip Erdogan, the central bank began easing in September, cutting its policy rate by 500 basis points to 14%.
It signalled last month that it would pause the easing cycle to monitor its effects in the first quarter.
Turkey strikes currency swap deal with UAE as ties warm
The cuts have left real yields in deeply negative territory as inflation accelerated to 36%, and sparked a currency crisis that saw the lira lose 44% of its value against the US dollar last year.
All but one of 16 economists in a Reuters poll had predicted the bank would keep its policy rate unchanged on Thursday.
The full-blown currency crisis was halted last month thanks partly to costly state interventions in the currency market and a scheme to protect lira deposits against forex depreciation.
The lira firmed slightly and was at 13.35 versus the dollar at 1108 GMT following the rate decision.
The rate cuts were part of Erdogan's unorthodox new economic plan that prioritises low interest rates and aims to boost exports, credit and employment.
Erdogan has rapidly overhauled the bank's leadership with like-minded officials in recent years, hammering its credibility.
Comments
Comments are closed for this article.