Turkey Central Bank Says Rates Won’t Be Cut Quickly After Pause

Turkey’s central bank left its benchmark interest rate unchanged at 17% at the first monetary policy meeting of the year, pledging to keep it elevated for an “extended” period, Bloomberg News reported. The lira rose. The Monetary Policy Committee’s decision was in line with the forecasts of most analysts in a Bloomberg survey. The dissenters, including economists at Morgan Stanley and Societe Generale SA, had predicted an increase of 50 to 100 basis points. The committee “has decided to maintain decisively the tight monetary policy stance for an extended period until strong indicators point to a permanent fall in inflation and price stability,” the bank said in a statement on its website. “Additional monetary tightening will be delivered if needed.” The lira rose as much as 0.7% after the decision and was trading at 7.3710 per dollar at 2:43 p.m. in Istanbul. Governor Naci Agbal has raised the benchmark one-week repo rate by a cumulative 675 basis points since his appointment in November, bringing inflation-adjusted rates to well above yields offered by emerging-market peers. His decisions to simplify the bank’s funding structure and end unannounced foreign-exchange interventions by state lenders have earned him enough credit to avoid another rate hike despite last month’s jump in inflation. Read more.