Turkey central bank keeps rates unchanged after polls

GMT 18:17 2015 Tuesday ,23 June

Arab Today, arab today Turkey central bank keeps rates unchanged after polls

Turkish lira banknotes
Ankara - AFP

Turkey's central bank on Tuesday kept its main interest rates unchanged, in a widely anticipated move two weeks after June 7 elections.

The central bank is keeping a careful eye on inflation while also trying not to provoke President Recep Tayyip Erdogan who has called for aggressive rate cuts to boost growth.

The bank said in a statement after its latest monetary policy committee meeting that the one-week repurchase rate would be kept at 7.50 percent, the marginal funding rate at 10.75 percent and the borrowing rate at 7.25 percent.

The bank said in its statement that it was carefully watching inflation due to recent pressure on the Turkish lira on currency markets.

"Recent movements in the exchange rates have delayed the improvement in the core indicators," it said.

"This, combined with the uncertainty in global markets and volatility in energy and food prices, makes it necessary to maintain the cautious stance in monetary policy."

The annual inflation rate ticked up to 8.1 percent in May from the 7.9 percent recorded in April.

But amid the post-election uncertainty, a high current account deficit and the persistently high inflation, rate hikes could on the cards in the next months.

"While the central bank kept interest rates on hold today, we think rate hikes are looking increasingly likely," said William Jackson, emerging markets economist at Capital Economics in London in a note to clients

The ruling Justice and Development Party (AKP) lost its overall majority in the elections, with the slowing economy and inflation troubles among the factors behind its decline.


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