Turkish central bank keeps interest rate steady at 50 pct for fifth consecutive time

Turkey’s Central Bank decided to leave the policy rate unchanged at 50 percent for the fifth time.

Tuesday August 20 2024 02:20 pm

Duvar English

The Central Bank's Monetary Policy Committee on Aug. 20 decided to keep the policy rate, the one-week repo auction rate, unchanged at 50 percent.

Economists have expected that the bank would leave the interest rate decision unchanged as well.

The bank stated that although the inflation pressure has been declining in different areas, “the high level of and the stickiness in services inflation, inflation expectations, and geopolitical developments keep inflationary risks alive.”

As mentioned in the previous decisions, the bank reiterated that the monetary tightening would be maintained considering “the lagged effects” of the implemented policies.

The similar monetary policies would be followed until the economic administration reaches the five percent inflation target in the medium term, according to the bank’s announcement.

Turkey's Consumer Price Index (CPI) increased by 3.23 percent in July, reaching its lowest level in the last nine months on an annual basis at 61.78 percent, according to the official data by state-run Turkish Statistical Institute (TÜİK).

This marked the fifth consecutive monthly meeting in which the central bank has kept the policy interest rate unchanged after a period of continuous hikes as part of the monetary tightening strategy. In June 2023, the bank increased interest rates for the first time in 27 months, raising them from 8.5 percent to 15 percent.

On Feb. 22, at the first meeting attended by new Governor Fatih Karahan, the the central bank decided to keep the interest rate unchanged at 45 percent. In March 2024, the bank raised the interest rate from 45 percent to 50 percent and has not implemented any change afterward.