Turkish Central Bank holds rate at 14 percent despite inflation surge

Turkey's Central Bank kept its policy rate steady at 14% for the second straight month on Feb. 17 as expected, despite a jump in inflation to nearly 50% after last year's easing cycle triggered a currency crisis.

Thursday February 17 2022 02:30 pm

Duvar English - Anadolu Agency

The Turkish Central Bank on Feb. 17 kept its one-week repo rate – also known as the policy rate – steady at 14% in line with market expectations.

The bank said in a statement that it is expecting disinflation process to start on the back of measures taken and financial stability along with the decline in inflation thanks to the base effect.

It also underlined the level of capacity utilization and other leading indicators showing that domestic economic activity remains strong thanks to robust external demand.

"Strengthening of the improving trend in current account balance is important for price stability," the statement said, adding: "The Committee assesses that extending long-term Turkish lira investment credit will play a significant role in achieving this target."

The statement also underscored that the bank is currently conducting a "comprehensive monetary policy review" to achieve permanent price stability, and the strategy it adopted to boost the use of Turkish lira in the country – "liraization" – would be "the most crucial part of this process."

The government-run Turkish Statistical Institute (TÜİK) reported an annual inflation rate of 48.69 percent in January, the highest in two decades, whereas the independent inflation group ENAG put the figure at 114.87 percent.