Turkish Lira Stable After Central Banks Maintains Tight Policy

The Turkish lira was stable against the US dollar after Turkey’s central bank decided at today’s meeting to keep interest rates unchanged.

The Central Bank of the Republic of Turkey maintained its interest rates without change, including the Marginal Funding Rate that stayed at 9.25%. Such decision was expected by basically everyone as the central bank needs to keep monetary policy tight to combat two-digit inflation. Indeed, the bank said about its plans for the future:

Tight stance in monetary policy will be maintained until inflation outlook displays a significant improvement. Inflation expectations, pricing behavior and other factors affecting inflation will be closely monitored and, if needed, further monetary tightening will be delivered.

Such stance opposes desire of Turkish President Tayyip Erdogan to see borrowing costs lower. Erdogan calls himself “enemy” of interest rates.

USD/TRY slipped 0.05% to 3.5358 as of 16:12 GMT today. EUR/TRY dropped 0.6% to 4.1261.

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