Central Bank to meet this week to decide on rates

ISTANBUL

Policymakers at Turkey’s Central Bank are set to meet later this week to decide on the key interest rate.

In its latest meeting in April, in a widely expected move, the Central Bank’s Monetary Policy Committee (MPC) kept the one-week repo rate – also known as the policy rate – unchanged at 14 percent.

The MPC members will meet on May 26 to consider the key rate. The Central Bank is also expected to keep the key rate steady at its current level at a time when monetary authorities in other countries are hiking rates in the face of rampant inflation.

In Turkey too, inflation has also been rising. Consumer prices increased by 7.25 percent on a monthly basis in April. The annual inflation rate accelerated to 69.97 percent from 61.14 percent in March.

“The Central Bank will continue to use all available instruments decisively within the framework of liraization strategy until strong indicators point to a permanent fall in inflation and the medium-term 5 percent target is achieved in pursuit of the primary objective of price stability,” the bank said in a statement last month after the PMC meeting.

The markets are also expecting a word from the Central Bank on inflation-indexed bonds. Authorities have been working for some time on the possible issuance of those bonds. If those bonds offer high yields, they may offer an alternative to stocks and foreign currencies and may boost demand for the Turkish Lira, helping the local currency appreciate.

Meanwhile, the Financial Stability Committee, chaired by Treasury and Finance Minister Nureddin Nebati, convened for the fourth time on May 21.

“The impacts of global and local inflation on the Turkish economy were assessed and views were exchanged on steps to be taken in the period ahead to fight inflation and maintain financial stability,” said the statement, released after the meeting.