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Türkiye’s central bank kept its interest rate unchanged at 45 percent

Türkiye’s central bank kept its interest rate unchanged at 45 percent on Thursday, completing a monetary tightening cycle to set the course for disinflation.

“The current level of the policy rate will be maintained until there is a significant and sustained decline in the underlying trend of monthly inflation and until inflation expectations converge to the projected forecast range,” said the bank in a statement.

It added that the monetary policy stance will be tightened if a significant and persistent deterioration in the inflation outlook is anticipated.

“Monetary transmission mechanism will be supported in case of unanticipated developments in credit growth and deposit rates. In order to support the monetary tightness, developments in market liquidity will be closely monitored, and sterilization tools will be effectively used whenever needed,” the statement said.

In January, the bank announced that it would end the sharp tightening cycle by delivering a rate hike of 250 basis points to tame double-digit inflation, saying conditions had been sufficient to start easing the cost of living crisis.

Inflation topped 85 percent in October 2022 and remains above 60 percent, inflicting hardship on consumers in Türkiye. The high inflation, coupled with the depreciation of the Turkish lira, has squeezed the incomes of millions of workers and pensioners struggling to make ends meet. ■

Famagusta Gazette