Turkey Central Bank maintains steady key interest rate

21 days ago
Turkey Central Bank maintains steady key interest rate

Turkey’s central bank maintained its key interest rate unchanged for the second consecutive month on Thursday, despite the challenges posed by high inflation in the country.

The monetary policy committee of the bank has announced its decision to maintain the policy rate at 50 percent. However, they emphasized their continued vigilance towards potential inflation risks.

Leading up to the local elections on March 31, the central bank raised its rate from 45 percent to 50 percent in response to the ongoing issue of inflation, which has been a persistent challenge for President Recep Tayyip Erdogan’s administration.

Inflation reached 69.8 percent year-on-year in April – up from 68.5 percent in March, according to official data published in early May.

The central bank said on Thursday that its monetary policy stance would “be tightened in case a significant and persistent deterioration in inflation is foreseen.”

Finance Minister Mehmet Simsek on Wednesday said inflation would start falling down after reaching its peak in May.

“Starting from the summer months, inflation will decline very rapidly,” he told Turkish media.

The government this month announced a three-year austerity plan aimed at reducing public spending to calm inflation.

It said it will limit recruitment and transport spending for public servants, among other measures.