Turkish Central Bank maintains rates despite pressure

ANKARA - Agence France-Presse

The one-week repurchase rate remained at 8.25 percent, the marginal funding rate at 11.25 percent and the overnight borrowing rate at 7.50 percent. REUTERS Photo

Turkey's Central Bank on Dec. 24 kept its main interest rates unchanged, again despite pressure from the government and President Recep Tayyip Erdoğan for a cut to stimulate growth.

The bank said in a statement after its latest monetary policy meeting that the one-week repurchase rate would remain at 8.25 percent, the marginal funding rate at 11.25 percent and the overnight borrowing rate at 7.50 percent.

Its meeting came after the Turkish lira on December 15 and 16 hit all time lows in value against the dollar, amid concerns about political instability in Turkey and the risk of spillover from the collapse of the Russian ruble.

After several years of surging growth, the Turkish economy has entered a phase of weakness with meagre expansion of 1.7 percent recorded in the third quarter.

Erdoğan had on Dec. 20 made a new call for a rate cut from the Central Bank - which is nominally independent and is well respected by markets - and called the high interest rates an "atrocity." "We need to bring down interest rates to encourage investors," he said.

"Despite low interest rates of around 1 percent in the U.S., Europe and Japan, the (Turkish) Central Bank's interest rates can go up to around 13 percent," he complained.       

"This is an atrocity. To be honest, I did my best but this is one of the areas where I failed to succeed," added the combative president.