Turkish Central Bank Keeps Interest Rates Unchanged

The Turkish central bank kept its main interest rate unchanged at 45 percent today, Thursday, which aligns with expectations following last month's rate hike. However, it indicated that it may tighten its monetary policy if there is a significant and persistent deterioration in inflation forecasts. The monetary policy meeting followed the appointment of Fatih Karahasan as governor of the central bank on February 3, after the resignation of Hafize Gaye Erkan, who claimed she needed to protect her family from what she described as a media smear campaign. Since June, the bank has raised the one-week repo rate by 3,650 basis points after President Recep Tayyip Erdoğan won a new term in the May elections and shifted dramatically towards a tightening monetary policy. All economists surveyed by Reuters, totaling 11 experts, expected the interest rate to remain stable this month. Karahasan, while presenting the bank's quarterly inflation report this month, stated that he would continue to pursue a tightening policy until inflation falls to the target rate, keeping the end-of-year inflation forecast at 36 percent despite expectations that it may exceed that.