Turkey keeps rates on hold in June


Turkey’s central bank held steady on its interest rates in June, as the economy rebounds impressively from a third quarter slowdown and the lira recovers from a torrid start to the year.

The Turkish central bank (CBRT) voted for no change on its three main policy levers this month – the Policymakers had begun to tighten policy last year in a bid to support the falling value of the lira which has pushed inflation to an eight year high.

But a softening in double digit inflation and a welcome return to economic growth has given the CBRT breathing space. The lira has also regained a steady footing after starting the year as the worst-performing emerging market currency. It has strengthened 7 per cent against the dollar since April.

Ahead of today’s decision, Muhammad Mercan, chief Turkey economist at ING, said the CBRT would be ending its tightening phase on the back of “inflation peaking, relief in domestic political concerns and the conducive external backdrop”.

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