Turkey’s Central Bank on Thursday kept its policy rate on hold at 14%, in line with expectations even though the country’s inflation rate reached a two-decade high in March.
The bank said that the ongoing geopolitical risks keep the downside risks to regional and global economic activity alive and increase the uncertainty.
“Concern over global food security, high commodity prices, supply constraints in some sectors that have become more evident particularly in energy, and high transportation costs have led to producer and consumer price increases internationally,” the bank said in a statement.
The bank also said that they are closely monitoring the effects of high global inflation and international financial markets.
“Central banks in advanced economies assess that the rise in inflation may last longer than previously anticipated due to rising energy prices and imbalances between supply and demand,” according to the statement.
However, the bank said that domestic economic activity remains strong, adding that sustainable current account balance is important for price stability.
Turkish inflation soared to a fresh two-decade high in March, leaving the lira increasingly vulnerable against foiregn currency.
The Turkish Statistical Institute had said that a combination of the lira’s fall, higher commodity prices and a large minimum wage increase at the start of the year have contributed to higher prices, with annual inflation accelerating to 61.1% in March from 54.4% in February.
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