Turkey’s central bank has maintained its key interest rate at 50 percent for the second consecutive month, despite the country grappling with surging inflation. The bank remains vigilant of inflation risks and is poised to tighten monetary policy if needed. The government has also announced a three-year austerity plan to curb public spending and combat inflation.
ISTANBUL: Turkey’s central bank on Thursday kept its key interest rate stable for the second month in a row even as the country is struggling with soaring inflation.
The bank’s monetary policy committee said it had decided to keep the policy rate constant at 50 percent but that it remains highly attentive to inflation risks.
Ahead of the March 31 local elections, the central bank hiked its rate 45 percent to 50 percent as the inflation had become a constant headache for President Recep Tayyip Erdogan’s government.
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.
The recent decision of the Turkey central bank to keep its key interest rate unchanged has sparked discussions among financial analysts and policymakers. With Turkey facing economic challenges and inflationary pressures, the central bank’s move signals its cautious approach to stabilizing the economy. While various emerging market economies are adjusting their monetary policies to address inflation and economic growth, the decision of the Turkey central bank reflects the delicate balance required to navigate these complex economic conditions. This decision is likely to have implications for businesses, investors, and consumers, and it will be important to closely monitor how the Turkish economy responds to the central bank’s stance.
Source: ARY NEWS
The Turkey central bank has maintained the key interest rate at 50 percent despite soaring inflation, following a previous hike ahead of local elections. Inflation has risen to 69.8 percent year-on-year, prompting the government to implement austerity measures to curb public spending. Finance Minister Mehmet Simsek expects a rapid decline in inflation from the summer months. The bank remains vigilant about inflation risks and is prepared to tighten monetary policy if necessary.
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