Turkey Central Bank Holds Rate Steady For Third Time

Turkey Central Bank Holds Rate Steady For Third Time

Turkey's central bank left its key interest rates unchanged on Thursday for a third policy session in a row amid the recent pick up in inflation.

The Monetary Policy Committee, led by TCMB Governor Murat Cetinkaya, kept the one-week repo rate unchanged at 8 percent, in line with economists' expectations.

The late liquidity window lending interest rate was retained at 12.25 percent, while the borrowing rate was left at zero percent.

The marginal funding rate and the borrowing rate was kept at 9.25 percent and 7.25 percent, respectively.

The Turkish central bank is constantly facing political pressure with the country's president Recep Tayyip Erdogan often calling for lower rates.

Erdogan has described himself an “enemy” of interest rates.

Citing recent data, the bank said the recovery in the economic activity has gained strength.

The Turkish economy expanded at the fastest pace in two years in the second quarter, growing 6.5 percent year-on-year.

Both domestic and export demand keep improving with the latter being driven by the European Union economies, the bank said.

The Committee assesses that the implementation of the structural reforms would contribute to the potential growth significantly, the TCMB noted.

“Current elevated levels of inflation and developments in core inflation indicators pose risks on the pricing behavior,” the bank said in a statement.

“Tight stance in monetary policy will be maintained until inflation outlook displays a significant improvement,”the bank added.

Headline inflation accelerated to 10.68 percent from 9.79 percent in August.