Turkish Central Bank Rejects Snap Rate Cut After Inflation Data

Turkey's newly named Central Bank Governor Erdem Basci attends an handover ceremony in Ankara“The Monetary Policy Committee will assess the inflation outlook in detail at the regular meeting which will be held on February 24,” it said.

Had inflation slowed below the 7.0 percent threshold indicated by Başçı, the central bank would have held a meeting Wednesday to discuss a cut.

Erdoğan had troubled markets by pushing for aggressive rate cuts at a time when inflation is still relatively high in Turkey.

The Turkish lira gained in value after the central bank’s decision, falling 0.32 percent to trade at 2.42 lira to the dollar.

However with legislative elections looming in June, it is unlikely the government will let up at all in its pressure on the nominally independent central bank for cuts.

“The central bank is likely to come under further pressure from the government to lower rates,” the London-based Capital Economics consultancy said in a note to clients.

“There’s a good chance that the central bank will still lower interest rates at its scheduled meeting later this month,” it added.

Turkey’s economic performance, which has lagged recently following strong growth over the last few years, is under the spotlight this year as Ankara holds the presidency of the G20 top world economies.