The CBRT keeps rates unchanged at 17% but remains hawkish

Turkish central bank (CBRT) kept interest rates unchanged at 17% as widely expected, on today’s policy meeting, but kept hawkish tone and showed readiness to further tighten policy to fight inflation that has risen to 15%.

The central bank said it will keep tight monetary policy as long as needed, until the mostly double-digits inflation falls to a 5% target.

Rate hikes by 675 basis points in November and December helped Turkish lira to reverse from its record lows and boosted foreign investment inflows, with current interest rate being the highest among all advanced or emerging economies.

The central bank’s Governor Naci Agbal, who was appointed in November, after President Erdogan fired the last two bank chiefs, said in his first interview that rate cuts are currently not on agenda, with hawkish stance expected to persist until inflation shows signs of substantial easing, with further tightening not ruled out if conditions worsen.