Turkish Central Bank keeps interest rates unchanged

Turkish Central Bank kept its key interest rate unchanged at 45% on Thursday, in line with expectations after raising interest rates last month, but said it may tighten monetary policy if the possibility of a significant and sustained deterioration in inflation expectations looms.

According to Reuters, the monetary policy meeting came after the appointment of Fateh Kara Khan as governor of the Central Bank on February 3, following the resignation of Hafiza Ghaya Arkan, claiming that she needed to protect her family from what she called a media smear campaign.

The bank has raised its one-week repurchase rate by 3,650 points since June, after President Recep Tayyip Erdogan won a new term in the May elections and radically shifted towards a policy of monetary tightening.

All 11 economists polled by Reuters expected interest rates to remain steady this month.

Kara Khan, while presenting the bank’s quarterly inflation report this month, said he would continue to pursue a policy of monetary tightening until inflation falls to the target rate, and kept inflation expectations at the end of the year at 36% despite expectations that it may rise above that.