ISTANBUL, Jan 18 (Reuters) - Turkey’s central bank kept interest rates steady on Thursday, saying it would stick “decisively” to a tight policy stance until inflation improves, despite President Tayyip Erdogan’s repeated calls for cheap credit.
The bank left its late liquidity window, the highest of several instruments it uses to set policy, at 12.75 percent, after making its first hike in eight months at its December meeting.
All 15 economists polled by Reuters had forecasted the bank would leave the repo rate unchanged at 8 percent, as well as the overnight lending rate, at 9.25 percent, and the overnight borrowing rate, at 7.25 percent. Those rates were also unchanged.
“The tight stance in monetary policy will be maintained decisively until inflation outlook displays a significant improvement, independent of base effects and temporary factors,” the bank’s monetary policy committee said in a statement.
While the bank emphasises its fight against inflationary pressure, Erdogan, a self-declared opponent of high interest rates, wants banks to lend more at lower rates to stimulate the economy.
Turkey’s annual inflation stood at 11.92 percent at the end of 2017, sharply above the bank’s official target of 5 percent.
Turkey’s economy has rebounded strongly from a downturn that followed by an 2016 coup attempt, helped by a series of government stimulus measures, and expanded by 11.1 percent year on year in the third quarter, its fastest expansion in six years.
The lira firmed to 3.7920 after the announcement from 3.8000 immediately before the decision. (Writing by Ezgi Erkoyun; Editing by Daren Butler and David Dolan)