Turkey's Central Bank hikes policy rate to 8 percent

ANKARA (AA) - Turkey’s Central Bank on Thursday hiked its policy and overnight lending rates after leaving the rates on hold during its previous meeting, according to the bank.

The bank hiked its policy rate by a 50 basis points to 8 percent from 7.5 percent; the overnight lending rate to 8.5 percent from 8.25 percent, while leaving the borrowing rate under which banks lend or deposit money to the Central Bank unchanged at 7.25 percent, it said in a statement.

The monetary policy committee had left all rates on hold in its previous meeting in October following six months in row of reductions.

“Recently released data indicates a deceleration in the economic activity for the third quarter. Meanwhile, demand from the European Union economies continues to contribute positively to exports,” the bank said.

“With the supportive measures and incentives provided recently, economic activity is expected to recover starting from the final quarter,” it said.

Despite the slowdown in aggregate demand that helps in lowering inflation, the bank warned that “exchange rate movements due to the recently heightened global uncertainty and volatility pose upside risks on the inflation outlook.”

Future monetary decisions will be closely linked to the course of inflation.

Apart from inflation expectations, pricing behaviors and other factors that could have an impact on consumer prices will stay in focus, the statement added.