Opting for backdoor measures, Turkey’s Central Bank holds interest rate steady
Turkey’s Central Bank left a key interest rate unchanged in favor of liquidity measures Thursday in what analysts described as a “missed opportunity” to send a positive signal to the markets.
ISTANBUL — Turkey’s Central Bank avoided raising a key interest rate Thursday, opting to impose backdoor liquidity measures to support the nation’s troubled currency.
The bank’s monetary policy committee announced it would hold its one-week repo rate steady at 8.25%, where it has remained since May 21 amid inflationary pressures on the Turkish economy.
Citing high “uncertainties” in the global economic recovery amid the COVID-19 pandemic, the committee said in a statement Thursday, “Keeping the disinflation process in track with the targeted path requires the continuation of a cautious monetary stance.”
The decision was expected by most economist surveyed in a Bloomberg poll, but some analysts said an interest rate hike was necessary to reduce volatility in the Turkish lira, which hit record lows against the US dollar earlier this week. Following the announcement, the lira slid slightly to 7.35 per greenback Thursday afternoon.
