Turkey’s central bank on Thursday kept its key interest rate unchanged for the eighth month in a row, with annual inflation announced at slightly below 50 percent in October, the state-run Anadolu news agency reported.
“The underlying trend of inflation registered a decline in October. Indicators for the last quarter suggest that domestic demand continues to slow down, reaching disinflationary levels. While core goods inflation remains low, signs of an improvement in services inflation have become more apparent. Unprocessed food inflation remains elevated due to temporary supply conditions,” the central bank said in a statement.
The central bank said it will maintain its restrictive monetary policy until “a significant and sustained decline in the underlying trend of monthly inflation is observed.”
According to the Turkish Statistical Institute (TurkStat), Turkey’s annual rate of inflation slowed less than expected in October to 48.6 percent from 49.4 percent in September.
Annual inflation had slowed sharply in August, falling to 52 percent from 61.8 percent in July.
Monthly inflation stood at 2.8 percent in October, slightly declining from 2.9 percent in September.
The central bank in early November had to raise its inflation forecast for this year and the next, as consumer price increases have slowed less than expected in recent months despite higher interest rates.
The central bank now sees inflation reaching 44 percent at the end of 2024, up from a previous estimate in August of 38 percent.
Consumer prices are expected to rise by 21 percent by the end of 2025, compared to 14 percent in the last forecast.
“The underlying trend in inflation is improving, but more slowly than expected,” Central Bank Governor Karahan told reporters.
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.
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.