ISTANBUL: The Turkish central bank kept interest rates on hold and said it would keep monetary policy tight until the inflation outlook improves significantly, hinting that no cuts are likely until next year.
The central bank said it expects consumer prices to start falling in 2015. It left its one-week repo rate at 8.25 percent, as forecast by 15 of 16 economists polled by Reuters. One economist had expected a cut in the main rate to 7.75 percent.
After hiking rates sharply in January to halt a slide in the lira, the central bank cut rates in May, June, July and August before leaving them on hold in September and October. “We think the bank will be patient before cutting rates and it will wait for inflation to fall in the first quarter of 2015,” said Tufan Comert, a strategist at Garanti Securities.
Businesses and economists now expect a year-end consumer price inflation rate of 9.22 percent, a central bank survey showed last week, creeping up from its previous poll and well above its target rate of 5.3 percent.
Turkish inflation is the highest among leading emerging markets and is embarrassingly far above target, according to Nicholas Spiro of Spiro Sovereign Strategy in London. Reuters
