Turkey: Central bank holds all key rates

ANKARA

The Central Bank of Turkey has kept all its key rates unchanged after a monetary policy meeting, the bank said in a statement Tuesday.

The current rates of 7.50 for the one-week repo, and 10.25 percent for the overnight lending rates have not changed since February.

The central bank's move came after the U.S. Federal Reserve left interest rates unchanged on Sept. 17.

The bank pointed out in a statement by the monetary policy committee that loan growth continues at reasonable levels in response to the tight monetary policy stance and macro prudential measures.

“External demand remained weak in the first half of the year, while domestic demand contributed to growth moderately. The composition of growth is expected to shift gradually towards net exports in upcoming periods with the support of rising demand from the European Union economies. ” said the statement

The bank also said that the inflation outlook was the key factor in the decision.

"Energy price developments affect inflation favorably, while exchange rate movements delay the improvement in the core indicators. Considering the impact of the uncertainty in domestic and global markets on inflation expectations and taking into account the volatility in energy and food prices, the Committee decided to maintain the tight liquidity stance as long as deemed necessary."

The bank added that its future monetary policy decisions will be depend on the improvements in the inflation outlook in the country.

The bank's decision had been forecast by most analysts. Analysts said the lira volatility, politics and the imminent Federal Reserve rate hike this year were the main drivers of the decision.