Turkey's Central Bank Lifts Key Rate, But Signals It Will Now Pause
25 January 2024 - 11:54AM
Dow Jones News
By Joshua Kirby
Turkey's central bank on Thursday lifted its key interest rate
for an eighth straight meeting but signalled it would now end its
cycle of increases.
The bank raised the benchmark one-week repo rate to 45% from
42.5%, in line with consensus expectations, per a FactSet poll of
economists.
With this hike, the tighter monetary environment brought about
by successive interest-rate increases has now been achieved, the
bank's monetary policy committee said. Pressures on domestic price
inflation remain, the bank said, including stickiness in services
inflation, still-high demand, and geopolitical risks. But strength
in foreign-exchange reserves and rebalancing of the current-account
balance, as well as demand for lira-denominated assets, has helped
ease trends in price rises, it said.
"The committee assesses that the monetary tightness required to
establish the disinflation course is achieved and that this level
will be maintained as long as needed," the bank said.
Price inflation has wreaked havoc on the Turkish economy in
recent years but only this year has the central bank, under new
Governor Hafize Gaye Erkan, begun to take the usual approach of
raising interest rates in response. Inflation rose to just under
65% in the last month of 2023, though there were encouraging signs
that underlying price rises are beginning to ease.
Write to Joshua Kirby at joshua.kirby@wsj.com;
@joshualeokirby
(END) Dow Jones Newswires
January 25, 2024 06:39 ET (11:39 GMT)
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