By Ed Frankl
Turkey's central bank held interest rates for a second-straight meeting, flagging that it is closely monitoring the impact of high energy prices resulting from the conflict in the Middle East.
The bank held its benchmark one-week repo rate at 37.0%, it said Wednesday. Investors had expected a cut to 36.0%, according to LSEG data ahead of the decision. It was the second consecutive hold after the bank cut its key rate for a fifth meeting in a row in January.
"Amid geopolitical developments and the resulting uncertainties, energy prices remain elevated and exhibit notable volatility," the bank said. "The effects of these developments and domestic energy prices on the inflation outlook through the cost channel and economic activity are being closely monitored."
While inflation had declined slightly in March, leading indicators suggest a slight increase in the underlying trend of inflation in April, it added. The bank said it was highly attentive to upside risks to inflation.
The Turkish lira was relatively unchanged after the decision.
The decision comes ahead of a raft of central bank decisions next week, including the Federal Reserve, European Central Bank and Bank of England, all of which are expected to hold their key rate.
"So long as energy prices don't spike again, we think Turkey's central bank will opt to leave interest rates on hold for at least a few more months," William Jackson, chief emerging markets economist at Capital Economics said in a note to clients.
Policymakers could resume interest-rate cuts in the third quarter as the decline in inflation is likely to continue, albeit on a gradual pace, he added.
Write to Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
04-22-26 0802ET
