Turkish CB's interest decision surprising: Economists

ISTANBUL

Economists on Thursday said that the Turkish Central Bank's interest rate decision – keeping them unchanged at 8.25% – was surprising.

Although a surprising decision, it is actually fully rational, Piotr Matys, emerging markets strategist in Robobank, told Anadolu Agency.

He added: "The key question is whether it is a pause in the easing cycle or the end of it."

The Central Bank's sixth meeting this year of the Monetary Policy Committee (MPC) on Thursday decided to keep the one-week repo auction rate constant at 8.25%.

In May, the Central Bank cut its interest rate 50 basis points to 8.75% from 9.25%, and since the beginning of this year, the bank has cut the rate 375 basis points.

Last year, the bank cut the rate gradually by 1,200 basis points from 24% to 12%.

Economists had expected a 25-50 basis points interest rate cut today.

Jason Tuvey, a senior emerging markets economist at Capital Economics, said: "Turkey’s Central Bank unexpectedly left interest rates on hold today."

"Ahead of the meeting, it was thought that rates would be cut, [but] we now expect rates to be left on hold over the rest of this year and next," he underlined.

Tuvey also said a rebound in external demand would also help to limit any further deterioration in the current account.