Turkish Central Bank keeps rates on hold, awaiting Fed move
ISTANBUL - ReutersTurkey’s Central Bank left interest rates unchanged on Nov. 24, opting to sit tight at its first meeting since a Nov. 1 election as it waits for an expected tightening by the U.S. Federal Reserve before following suit.
Economists expect Turkey to raise rates at some point to bolster the weak lira and tame high inflation. But the Central Bank has signaled it wants to wait to see the impact of an expected Fed move before adjusting its own policy.
All 14 economists surveyed by Reuters had expected the bank to keep the one-week repo rate unchanged. The bank also left the overnight lending rate at 10.75 percent and the overnight borrowing rate at 7.25 percent.
The Central Bank said that it would maintain a tight monetary policy taking into account inflation expectations, pricing behavior and other factors affecting inflation.
“The tight liquidity stance will be maintained as long as deemed necessary,” it said in a statement following its monetary policy meeting.
It was the first meeting since the ruling Justice and Development Party won a clear victory in the Nov. 1 parliamentary election, restoring the single-party rule it had lost in a June 7 vote.
The political uncertainty generated by the inconclusive June election had taken a toll on the economy, with foreign investors staying on the sidelines and growth slowing.
Once the U.S. Federal Reserve (Fed) raises rates, possibly as soon as next month, emerging markets such as Turkey are expected to follow suit to defend their currencies against a surging dollar.