Turkey holds rates steady, sending lira to new low

Photo: Turkey holds rates steady, sending lira to new low / Turkey

Turkey's central bank kept its key interest rates steady on Tuesday, sending the local currency down to a new low of around 2.25 lira to the dollar Hurriyet Daily News reported.

The bank's decision had been expected after Economy Minister Nihat Zeybekci on Monday ruled out any hike in rates despite the currency's rapid decline in the face of a deep political crisis.

The bank said in a statement after its monthly policy meeting that it was holding its key overnight rate at 7.75 percent, one-week repurchasing or repo rate at 4.5 percent and its borrowing rate at 3.5 percent.

The lira was quoted at 2.25 to the dollar immediately after the decision and 3.05 to the euro.

The central bank has been under pressure from Prime Minister Recep Tayyip Erdogan's embattled government not to raise interest rates in order to to boost growth and keep inflation in check.

Instead, it has been using its foreign currency reserves to shore up the currency, selling about $17.6 billion last year.

Zeybekci had said on Monday that the central bank should not raise rates "because it would be an inconclusive step and put a permanent burden on our economy". Turkey's finances, like those of other emerging economies, are also under pressure over the US Federal Reserve move to reduce its monetary stimulus programme.

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