The Turkish central bank maintains its key rate at 14%

Turkey’s central bank is expected to keep its key rate unchanged for an eighth meeting next week, polls show, as inflation soared to its highest level in 24 years.

The Central Bank of the Republic of Turkey (CBRT) has kept the one-week repo rate at 14% for the past seven meetings and reiterated its expectations for the start of the disinflation trend.

Most economists expect the benchmark policy rate to remain stable until the end of the year, according to a Reuters survey.

The policy rate has been stable since January, when the CBRT halted an easing cycle after its cuts totaling 500 basis points since September last year.

The 14 economists who took part in the Reuters poll, released on Friday, expected the bank to hold its benchmark rate at next week’s policy-setting meeting.

Seven of the nine economists surveyed expect the key rate to remain at the same level by the end of the year. One expected a reduction to 12% by then, while another predicted a rise to 20%.

Turkey’s annual inflation rose at a slower than expected pace in July but still hit a new 24-year high of almost 80%, fueled in part by soaring energy prices due to Russia’s invasion of Ukraine.

The CBRT raised its year-end inflation forecast to 60.4% last month and saw it peak at nearly 90% in the fall.

President Recep Tayyip Erdoğan promised in June that his government would continue to lower interest rates rather than raise them.

Erdoğan is known for his opposition to higher borrowing costs, which he says only make “the rich richer and the poor poorer”.

The government affirmed its commitment to boost production, exports and employment with a low interest rate policy, and promised a current account surplus that should eventually stabilize the Turkish lira and calm inflation.

The lira lost 44% of its value against the dollar last year. It has further depreciated by 27% this year.

The central bank will announce its rate decision for this month on August 18.

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