Turkey’s central bank held its key interest rate on Tuesday, as mounting political and military concerns push the Turkish lira to record lows.
The central bank left its main rate unchanged at 7.5 percent, as forecast by economists polled by Reuters.
After the decision, the lira hit its weakest ever level against the dollar, falling as low as 2.8850, having traded at 2.8675 beforehand.
In a statement, the central bank said a backdrop of falling food and energy prices, plus domestic and global market uncertainty had factored in its decision.
“Processed food and energy price developments affect inflation favorably in the short run, while exchange rate movements delay the improvement in the core indicators,” it said.
“Considering this delay and taking into account the uncertainty in domestic and global markets and the volatility in energy and food prices, the Committee decided to implement a tighter liquidity policy as long as deemed necessary.”
The bank added that future monetary policy decisions would be “conditional on the improvements in the inflation outlook.”
“Inflation expectations, pricing behavior and other factors that affect inflation will be monitored closely and the cautious monetary policy stance will be maintained… until there is a significant improvement in the inflation outlook.”
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