By Ed Frankl
Turkey's central bank held its benchmark interest rate on Thursday, potentially signaling the end of its recent series of hikes, despite still hot inflationary pressures.
The central bank kept the one-week repo at 50.0%, commenting that March's rate decision--when it raised the key rate by five percentage points from 45.0%--has led to a significant tightening in financial conditions, it said. The bank has gradually ramped up its interest rate from 8.5% since June last year.
"Considering the lagged effects of the monetary tightening, the committee decided to keep the policy rate unchanged, but reiterated that it remains highly attentive to inflation risks," the bank said.
However, despite a continued decline, the underlying trend of monthly inflation was higher than expected, and domestic demand remains resilient.
"In addition to the high level of and the stickiness in services inflation, inflation expectations, geopolitical risks, and food prices keep inflationary pressures alive," the bank added.
Turkish inflation was 68.5% in March, higher than the 67.1% of February, with the less volatile core measure--stripping out food, energy and gold costs--accelerating even faster.
"Turkey's economy continues to run hot and inflation pressures remain strong, suggesting rates won't be cut anytime soon," Capital Economics economist Nicholas Farr said in a note to clients ahead of rate decision.
Write to Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
04-25-24 0738ET
