Turkey central bank leaves rates on hold, lira drops

Turkey’s central bank kept its benchmark rate unchanged at 24 percent.

The bank however did not pledge to make additional tightening if needed in a statement on Thursday. It had made such a promise in a decision to leave rates unchanged in March.

Turkey’s central bank is seeking to lower inflation from 19.7 percent while trying to match the government’s pro-growth policies. 

The lira fell after the decision. It weakened 1.3 percent to 5.946 per dollar at 3 p.m. in Istanbul, extending the lowest level since October.

“No other way to say this, but pretty ridiculous move by the CBRT,” said Tim Ash, senior strategist at Blue Bay Asset Management in London. “It’s like the CBRT has just made mistake, after mistake over the past couple of years.”

Turkey’s foreign exchange reserves have declined below $30 billion on a net basis as the Turkish authorities sought to defend the lira. At the same time, the bank is seeking to stimulate lending through funding the country’s banks in the repo market.

President Recep Tayyip Erdogan’s interference in monetary policy last year helped send the lira to a record low in August.