Turkey’s central bank on Thursday kept its key interest rate unchanged for the seventh month in a row, with annual inflation announced at around 50 percent in September, the state-run Anadolu news agency reported.
The bank’s monetary policy committee said following a meeting headed by central bank Governor Fatih Karahan that it had decided to keep the policy rate constant at 50 percent but would remain attentive to inflation risk.
The committee said it would continue with its tight monetary policy until there is a significant and permanent fall in monthly inflation and until annual inflation falls to a level within expectations, adding that monetary policy tools will be used effectively if there is a significant and permanent deterioration in the inflation figures.
According to the Turkish Statistical Institute (TurkStat), Turkey’s annual rate of inflation slowed less than expected in September to 49.4 percent after it slowed sharply in August, falling to 52 percent from 61.8 percent in July.
Monthly inflation increased to 2.97 percent, above expectations in September, from 2.47 percent in August.
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 Karahan told Reuters in a July interview that the central bank was 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 ways 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 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.