"Turkey surprises markets by keeping rates on hold
By DPA
Jul 11, 2005, 19:00 GMT
Ankara - After seven consecutive monthly rate cuts, Turkey\'s central bank surprised markets Monday by keeping its benchmark rate on hold at 14.25 per cent.
With inflation currently at nine per cent and consequently only marginally above the central bank\'s eight per cent target, analysts believe that the bank has room to trim rates.
This is particularly the case since economists are predicting that the nation\'s inflation rate will this year fall short of the central bank\'s eight per cent target. A recent strengthening of the currency, the lira, has helped to offset the high cost of energy and keep the pressure up for lower official rates.
But delays to a new International Monetary Fund loan agreement and signs that the Turkish economy is growing strongly appears to have led to the bank deciding to take a pause in its rate-cutting cycle.
Last month the bank sliced 25 basis points off borrowing costs, which was less than the 50 basis points economists had expected."
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