Turkey's central bank upholds key interest rate amid slowing growth, inflation concerns

(MENAFN) Turkey's central bank decided to keep its key interest rate unchanged at 50 percent for the fifth consecutive month, reflecting a continued emphasis on liquidity management amid signs of decelerating economic growth. The Monetary Policy Committee's decision aligns with expectations from economists who had anticipated that the central bank would maintain the current rate.

The central bank's focus is shifting towards implementing additional tightening measures to manage liquidity conditions effectively while keeping interest rates steady. Recent actions include sterilizing excess liquidity through borrowing from the main clearing house and conducting lira purchase auctions. This approach underscores the bank's strategy to stabilize economic conditions without altering the main interest rate.

Annual inflation in Turkey has decreased notably to 61.78 percent, falling slightly below expectations for the previous month. However, monthly inflation rates, which the central bank closely monitors, have shown volatility. The bank aims to see a consistent decline in these rates before considering any potential rate cuts. Additionally, inflation expectations among corporations and households remain higher than anticipated, which the central bank is addressing in its long-term economic projections. The bank forecasts that inflation will decrease to 38 percent by the end of 2024 and further drop to 14 percent by the end of 2025. 

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