Turkey's central bank holds policy rate at 37% amid rising energy costs
The Central Bank of the Republic of Turkey kept its benchmark rate at 37% for the fifth meeting in a row, citing higher energy prices and a still-elevated inflation outlook.
Turkey's central bank decided on Thursday to keep its policy rate at 37% for the fifth consecutive session, with the one-week repo auction rate unchanged and the overnight lending and borrowing rates held at 40% and 35.5%. Governor Fatih Karahan led the Monetary Policy Committee, which highlighted a slight decline in core inflation but emphasized the risk posed by rising global energy prices linked to the United States' conflict with Iran.
August data showed consumer prices up 1.84% month-on-month and annual inflation easing to 31.51% from 31.75% in July, while energy inflation surged to 39.23%. One outlet estimates from the Inflation Research Group placed August inflation at 2.24% month-on-month and 49.03% annually. The bank raised its year-end inflation forecast to 28% and warned it would tighten policy if inflation deteriorated significantly. The next policy meeting is set for October 22.
Why it matters
The decision signals Turkey's stance on inflation control as global energy prices threaten price stability and the lira's value.
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