Turkey bank to keep rates high while inflation above 10%

Turkey’s central bank will keep its monetary policy tight so long as the inflation rate remains in double digits, Deputy Prime Minister Mehmet Şimşek said, according to Bloomberg.

Keeping inflation in single digits then “implies an appropriate monetary policy stance as well as a strong fiscal stance,” Şimşek said in an interview with the news service late on Wednesday. There was no trade off between lower inflation rates and growth, he said.

“Obviously they will keep rates high as long as inflation is in double digits,” he said. “The central bank has been clear.”

Turkey’s inflation rate dropped to 10.4 percent in January, the lowest since July, as a decline in the dollar against major emerging market currencies and slower inflation in food and clothing prices helped pare increases. The rate slowed from 11.9 percent the previous month, dropping below analysts’ estimates of 10.6 percent.

Şimşek, when asked whether the government was negotiating with the United States over possible fines against state-run Halkbank for evading sanctions on Iran, said the issue was between the bank, the U.S. Treasury and Justice Department.

He said a $4 billion unpaid debt of national telecommunications company Turk Telecom shouldn’t be classified as non-performing because there was an underlying asset backing the lending. The Turkish treasury won’t stand on the sidelines in seeking resolution of the matter with lenders and the main owner, he said.