Turkey's central bank holds policy rate at 9%

Turkey's central bank holds policy rate at 9%
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Turkey’s central bank held its policy rate steady at 9%, fulfilling last month’s pledge that it would end a four-month easing cycle after President Tayyip Erdogan called for single-digit rates despite soaring inflation

Turkey’s central bank on Thursday left interest rates unchanged for the first time in five months, as foreseen by many economists, after the bank pledged last month the rate cut cycle was over.

“Considering the increasing risks regarding global demand, the monetary policy committee evaluated that the current policy rate is adequate,” the bank said in a statement.

Earlier, Reuters reported that all 13 economists that participated in its poll expected the repo rate to remain unchanged at 9%.

Economists said the path of monetary policy for next year will depend on the outcome of presidential and parliamentary elections scheduled for June 2023 at the latest.

After policymakers brought rates into single digits as demanded by President Recep Tayyip Erdogan, the Turkish leader signaled the cost of money is now low enough to encourage investment.

To heed Erdogan’s calls, The Central Bank defifed economic convention in a year that saw the most aggressive global monetary tightening in decades. Four rounds of Turkish rate cuts starting in August delivered 500 basis points of easing during a period when inflation topped 80%

Experts said another victory by Erdogan is likely to see the continuation of unorthodox policies that prioritise growth and exports, while the main opposition bloc would ensure the central bank's independence, allowing it to raise rates.