Financial News: Turkey Central Bank Keeps Rates Unchanged

Turkey Central Bank Keeps Rates Unchanged

(RTTNews) - Turkey's central bank left its key interest rates unchanged on Thursday amid concerns about the impact of geopolitical developments on the inflation outlook.

The Monetary Policy Committee of the Central Bank of the Republic of Turkey decided to hold the policy rate at 37.0 percent, as widely expected.

The committee retained the central bank overnight lending rate and the overnight borrowing rate at 40.0 percent and 35.5 percent, respectively.

Policymakers observed that the underlying trend of inflation is decelerating. However, elevated energy prices amid geopolitical developments pose an upward risk to the inflation outlook, the committee noted.

The committee said that the tight monetary policy stance will be maintained until price stability is achieved, and it will help to strengthen the disinflation process. ING economist Muhammet Mercan said, ".the CBT has reiterated its narrative of improving underlying monthly inflation momentum, as higher rates and slower loan growth have weakened domestic demand, containing the indirect effects on inflation."

Given this backdrop, the economist sees the policy rate at 35 percent by the end of 2026, with two 100 basis-point cuts in the last quarter of this year.

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