World Economy

Turkey CB Keeps Rates on Hold

Turkey CB Keeps Rates on HoldTurkey CB Keeps Rates on Hold

Turkey’s central bank kept interest rates on hold on Tuesday after a drop in food and energy prices eased inflation pressures, maintaining a cautious stance even after political uncertainty sent the lira to a series of record lows, Reuters reported. The bank kept its one-week repo rate at 7.50% and the overnight borrowing rate at 7.25%. The overnight lending rate remained 10.75% and the primary dealers’ overnight borrowing rate 10.25%. In a Reuters poll of 12 economists, eight had expected key rates to be left unchanged and four had forecast a 50-100 basis point hike in the one-week repo rate. Governor Erdem Basci said July 30 that he could move from his unorthodox interest rates corridor, introduced five years ago, to a single-rate policy as early as today. Declining volatility in the US bond market allows policy makers to set a single short-term benchmark interest rate instead of the current daily adjustments, Basci said. The lira weakened after the rates decision and was trading 0.4% lower at 2.88 per dollar in Istanbul.