Turkish Central Bank holds rate on inflation concerns

ISTANBUL - Agence France-Presse

Turkey's Central Bank on Oct. 23 left interest rates unchanged, saying it would not loosen monetary policy until there is a significant improvement in the inflation outlook.        

The Bank said in a statement after its latest monetary policy meeting that the one-week repurchase rate would remain at 8.25 percent, the marginal funding rate at 11.25 percent and the overnight borrowing rate at 7.50 percent.        

"Inflation expectations ... will be closely monitored and the tight monetary policy stance will be maintained until there is a significant improvement in the inflation outlook," it stated.        

The Central Bank, which is nominally independent, has been under pressure from the government and the President Recep Tayyip Erdoğan to bring interest rates down to sustain growth.        

In January, the Bank had aggressively raised key rates to halt a steep drop in the value of the the lira. Although it has been shaving them since then, the Bank has repeatedly said that it would not loosen its monetary policy until the inflation rate comes down.

Turkey's annual inflation slowed to 8.86 percent in September - still higher than the Central Bank's year-end target of 7.6 percent.

The Turkish economy has recently taken a blow due to the chaos in neighbors Syria and Iraq where Islamic militants have seized swathes of territory, as well as a pullback in liquidity by major central banks such as the U.S. Federal Reserve.        

Earlier this month Turkey lowered its economic growth forecast for 2014 from four percent to 3.3 percent, blaming tensions in the Middle East.        

Growth slowed sharply to 2.1 percent growth in the second quarter, squeezed by the rate rises to defend the Turkish Lira, official data showed last month.