Turkish Central Bank holds key interest rates steady

Turkey’s Central Bank on Thursday held key interest rates at their current levels, as expected.

The one-week repo rate will be kept at 8 percent while the borrowing rate will remain at 7.25 percent, in line with expectations. The overnight lending rate will stay at 9.25 percent, according to the bank’s Monetary Policy Committee.

"Recently released data indicate that the recovery in the economic activity has gained pace. Domestic demand conditions have improved and demand from the European Union economies continues to contribute positively to exports," read a statement on Thursday.

The bank said that economic activity is expected to further accelerate due to the supportive measures and incentives provided recently by the Turkish government.

"The Committee assesses that the implementation of the structural reforms would contribute to the potential growth significantly," it said.

"Although recent improvements in cost factors and expected partial correction in food prices will contribute to disinflation, current elevated levels of inflation pose risks on the pricing behavior. Accordingly, the Committee decided to maintain the tight stance of monetary policy," the statement read.

The bank said its future monetary policy decisions would depend on the inflation outlook.