Turkish central bank holds rates at 50% for fifth month
ISTANBUL, Aug 20 (Reuters) -Turkey's central bank held interest rates steady at 50% for a fifth straight month on Tuesday as expected, and repeated it remains vigilant to inflation riskseven as it expects disinflation to continue.
The central bank last raised the policy rate in March, by 500 basis points, capping anaggressive tightening cycle that began more than a year ago to rein in years of soaring prices.
It has since held steady while vowing to hike rates more if the outlook worsens, though analysts generallyexpect cuts to begin later this year.
Annual inflation began dipping in June and touched 61.78% last month in what is expected to be a gradual, lasting decline. Economists predict it will reach about 42% by year end.
Since June last year, the central bank has raised its policy rate TRINT=ECI by a total 4,150 basis points, reversing years of monetary stimulus supported by President Tayyip Erdogan to boost economic growth despite soaring prices.
The policy U-turn is clamping down hard on credit and economic growth, and aims to leave behind a years-long cost-of-living crisis and series of currency crashes.
Earlier this month, the central bank maintainted its inflation forecasts for end-2024 and -2025 at 38% and 14% respectively, projecting it to fall to 9% by the end of 2026.
In a Reuters poll last week, all 17 economists expected the bank to hold rates this month and to not ease until October at the earliest, with four forecasting November and five forecasting next year.
The policy rate was expected to drop by 500 basis points to 45% by the end of 2024, according to the poll.
Reporting by Ezgi Erkoyun; Editing by Jonathan Spicer
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