Turkey Central Bank Keeps Interest Rate At 45%

Turkey's central bank maintained its key rate at 45 percent on Thursday, marking the end of its monetary tightening cycle after eight consecutive months of hikes

Istanbul, (UrduPoint / Pakistan Point News - 22nd Feb, 2024) Turkey's central bank maintained its key rate at 45 percent on Thursday, marking the end of its monetary tightening cycle after eight consecutive months of hikes.

It was the first rate decision delivered by the bank's newly appointed governor Fatih Karahan, a former economist at the Federal Reserve Bank of New York and US online retail giant Amazon.

The bank said that "the current level of the policy rate will be maintained until there is a significant and sustained decline in the underlying trend of monthly inflation."

Turkey's annual inflation rate held stable in January at nearly 65 percent, but month-on-month consumer price increases jumped sharply following a huge minimum wage hike.

The monthly inflation rate in January climbed to 6.7 percent, from 2.9 percent in December, following a 49-percent rise in the minimum wage that went into effect in January.

Inflation remains a pressing issue for President Recep Tayyip Erdogan's government ahead of local elections in March.

His ruling AKP party is trying to win back control of major cities, including Istanbul and the capital Ankara, currently held by the main opposition party.

Turkey's central bank, which has raised its key rate from 8.5 percent to 45 percent since June, said last month that the level was sufficient to start easing the cost of living crisis.

Karahan said in his first public appearance on February 8 that there was no need for a further rate hike but warned the central bank would review its decision if the inflation outlook deteriorated, opening the door to maintaining the tightness needed to achieve price stability.