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Turkey keeps rates on hold in July

Turkey has kept its interest rates on hold a year on from the country’s failed military coup which has driven up inflation through a falling currency.

The Turkish central bank voted for no change to any of its three policy rates in July – the fourth consecutive month on hold – after kicking off a tightening cycle late last year.

Turkey’s lira has borne the brunt of investor fears over the country’s political stability following an unprecedented crackdown on dissent after last year’s attempted military overthrow of the government.

The currency is world’s worst performing major exchange rate in the last 12 months, falling just under 20 per cent against the dollar since July 15 2016.

Still, the economy is managing to recover after a surprise quarterly contraction in the three months to September as the government has turned on the spending taps. Inflation is also stabilising having hit its highest level in nine years.

In a statement accompanying its decision, the central bank said it would maintain its “tight” policy stance “until the inflation outlook displays a significant improvement”.

The lira was broadly unchanged following the decision, rising 0.34 per against the dollar at publication time to TRY3.5190.

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