Turkey held its key interest rate at 45% on Thursday as consumer prices rose by nearly 65% in January.
ADVERTISEMENTTurkey’s central bank left its key interest rate unchanged at 45%, pausing a series of aggressive rate hikes aimed at taming high inflation in the country.
The central bank said it was keeping the benchmark one-week repo rate on hold, which was the bank's first interest rate decision under its newly appointed governor, Fatih Karahan.
The move was in line with expectations the rate would be kept constant after the bank said last month that monetary tightness needed to "establish the disinflation course" was achieved.
On Thursday, the bank suggested the current rate would be maintained until "there is a significant and sustained decline in the underlying trend of monthly inflation".
President Recep Tayyip Erdogan appointed Karahan as the country's central bank governor on 3 February, replacing Hafize Gaye Erkan, who resigned after claims of nepotism emerged in local media. Erkan, a former US-based bank executive and Turkey’s first woman governor, strongly rejected the claims.
Under Erkan's tenure, the bank had raised the benchmark interest rate from 8.5% in June to 45% last month.
The rate hikes came after Erdogan, who was reelected in May, reversed his unconventional policies that economists say helped trigger a currency crisis and drove up the cost of living, leaving households struggling to afford basic goods.
Despite the series of hikes, inflation remains high — consumer prices rose nearly 65% in January. The Turkish lira, meanwhile, has slumped to a new record low against the dollar this week, resulting in 31 lira going for $1 (€0.93).
Karahan, a former deputy governor under Erkan, has insisted Turkey will maintain policy to fight rampant inflation overseen by Finance Minister Mehmet Simsek.
