Turkish Central Bank Keeps Its Key Interest Rate Unchanged, Pausing A Series Of Hikes

People walking are reflected in the glass of a clothing shop in Eminonu commercial area in Istanbul, Turkey, Wednesday, Feb. 21, 2024. Turkey's central bank left its key interest rate unchanged at 45% on Thursday, pausing a series of aggressive rate hikes aimed at taming high inflation. (AP Photo/Khalil Hamra)
People walking are reflected in the glass of a clothing shop in Eminonu commercial area in Istanbul, Turkey, Wednesday, Feb. 21, 2024. Turkey's central bank left its key interest rate unchanged at 45% on Thursday, pausing a series of aggressive rate hikes aimed at taming high inflation. (AP Photo/Khalil Hamra)
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ANKARA, Turkey (AP) — Turkey’s central bank left its key interest rate unchanged at 45% on Thursday, pausing a series of aggressive rate hikes aimed at taming high inflation.

The central bank said it was keeping the benchmark one-week repo rate on hold, according to a statement. It was the bank's first interest rate decision under its newly appointed governor, Fatih Karahan.

The move was in line with expectations that the rate would be kept constant after the bank said last month that monetary tightness needed to “establish the disinflation course” was achieved.

On Thursday, the bank suggested the current rate would be maintained until “there is a significant and sustained decline in the underlying trend of monthly inflation.”

President Recep Tayyip Erdogan appointed Karahan as central bank governor on Feb. 3, replacing Hafize Gaye Erkan who resigned after claims of nepotism emerged in local media. Erkan, a former U.S.-based bank executive and Turkey’s first woman governor, strongly rejected the claims.

Under Erkan's tenure, the central bank had raised the benchmark interest rate from 8.5% in June to 45% last month.

The rate hikes came after Erdogan, who was reelected in May, reversed his unconventional policies that economists say helped trigger a currency crisis and drove up the cost of living, leaving households struggling to afford basic goods.

Despite the series of hikes, inflation remains high — consumer prices rose nearly 65% in January. The Turkish lira, meanwhile, has slumped to a new record low against the dollar this week, going for 31 lira for $1.

Karahan, a former deputy governor under Erkan, has assured that Turkey would maintain policy to fight rampant inflation overseen by Finance Minister Mehmet Simsek.