Turkey's Central Bank Keeps Key Rate on Hold

By Ed Frankl

Turkey's central bank kept its benchmark interest rate unchanged for a sixth meeting in a row, even as policymakers signaled that sticky services inflation would ease in the final quarter of the year.

The bank's policy committee on Thursday left the its policy rate at 50%, the highest level in more than two decades, having last raised rates in March. The decision was expected by economists, according to a consensus compiled by FactSet, who generally expect a first cut to come in the coming months.

"The committee decided to keep the policy rate unchanged, but reiterated that it remains highly attentive to inflation risks," the bank said in its accompanying policy statement.

However, the impact of services inflation, a symbol of underlying trends which across many economies has halted the fall in overall inflation, is expected to lessen in the final quarter, the bank said.

While overall Turkish inflation cooled to 52% in August from 62% in July, the bank stressed that indicators jointly pointed to no discernable change in trends in August.

Elsewhere, core goods inflation remains low despite a slight uptick, it added.

The central bank has raised its policy rate from just 8.5% in June 2023 to its current rate in a reversal of the monetary stimulus previously advocated by Turkey's president Recep Tayyip Erdogan.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

September 19, 2024 07:36 ET (11:36 GMT)

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