Turkey’s central bank on Tuesday kept its key interest rate unchanged for the fourth month in a row, with annual inflation recorded at over 71 percent in June, the state-run Anadolu news agency reported.
The bank’s monetary policy committee said it had decided to keep the policy rate constant at 50 percent but would remain attentive to inflation risks.
Turkey’s annual inflation rate dropped slightly to 71.6 percent in June from 75.4 percent in May. The bank said inflation would temporarily increase again in July although finance authorities said consumer prices had finally peaked in June and would begin to slow in the rest of the year.
Turkey has been battling a cost-of-living crisis that prompted President Recep Tayyip Erdoğan to drop his opposition to interest-rate hikes to combat inflation.
The central bank began to raise its key rate in June 2023, gradually taking it from 8.5 percent to 50 percent.
The last time the central bank increased the key rate was in March.
Central Bank Governor Fatih Karahan told Reuters in an interview earlier this month that the central bank is determined to combat soaring prices and will stick patiently to its tight policy stance.
“We will maintain tightness and wait for data and expectations to get in line with our disinflation path. We think we still have some way to go in this regard,” Karahan said.
“We want to see a significant and sustained fall in the underlying trend of monthly inflation. We are extremely determined to bring down inflation,” Karahan said in the interview, his first with the media since becoming central bank chief in February.
The central bank expects disinflation to take hold in the second half of the year and forecasts an end-year rate of 38 percent, due to its tight policy stance. Economists polled by Reuters expect the inflation rate to fall to around 42 percent by yearend.