By Ed Frankl
Turkey's central bank held borrowing costs, flagging that it could raise interest rates again should inflation rise further on increasing energy prices prompted by the war in the Middle East.
The Central Bank of Turkey held its benchmark one-week repo rate at 37.0% on Thursday. Investors put slightly more chance of a hike than a hold, according to LSEG data ahead of the decision. In January, the bank cut its key rate for a fifth meeting in a row to 37% from 38%.
The central bank said despite a relatively flat underlying trend in inflation in February, the impact of the war increased energy prices and reduced global risk appetite.
"In case of a significant and persistent deterioration in the inflation outlook, which can also be driven by the recent developments, monetary policy stance will be tightened," the bank said in its statement accompanying the decision.
Earlier this month, the central bank suspended weekly repo auctions and launched a new lira-settled foreign exchange forwards facility to stem the fall in the lira. The U.S. dollar nevertheless hit a record high against the Turkish lira on Wednesday.
"To contain the risks posed by these factors to the inflation outlook, decisions supporting tight monetary policy have been enacted alongside coordinated fiscal measures," the bank said.
Write to Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
03-12-26 0741ET
