Turkey’s Central Bank keeps interest rates unchanged in first meeting after local elections

Turkey's Central Bank kept the policy rate unchanged from the previous 50 percent in the first meeting held after the local elections.

Thursday April 25 2024 08:11 pm

Duvar English

Turkey's Central Bank kept the policy rate unchanged at 50 percent in a meeting on April 25. The meeting was the first meeting held after the March 31st local elections which resulted in an AKP defeat for the first time in its history.

In a statement, the bank said “the underlying trend” of monthly inflation was higher than expected in March “despite the ongoing weakening.”

“While imports of consumption goods and gold contribute to the improvement in the current account balance, other recent indicators imply that domestic demand remains resilient. In addition to the high level of and the stickiness in services inflation, inflation expectations, geopolitical risks, and food prices keep inflationary pressures alive,” the bank said, adding that it will continue to follow the inflation trend.

The bank also said previous monetary policy decisions “have led to a significant tightening in financial conditions. The tight monetary stance will be maintained until a significant and sustained decline in the underlying trend of monthly inflation is observed, and inflation expectations converge to the projected forecast range.”

“The Committee will decisively use all the tools at its disposal in line with its main objective of price stability,” it added.

In March, the bank raised the rate by 500 basis point to 50 percent.

After the 2023 elections, Ankara's annual "medium-term programme" set a milestone in a broader policy U-turn summer after President Recep Tayyip Erdoğan named a new cabinet and central bank chief. Since June, the new central bank has raised the interest rates from 8.5 percent to 50 percent, so far.

Despite the loss of the Justice and Development Party (AKP) in the 2024 local elections for the first time in its 23-year history, Finance Minister Mehmet Şimşek and Erdoğan reiterated the continuation of tight monetary policy.