Istanbul, 20 July 2023 (dpa-AFX/MIA) - Turkey's central bank raised its key interest rate for the second straight meeting on Thursday, with a goal to establish the disinflation course as soon as possible, anchor inflation expectations, and to control the deterioration in pricing behaviour.

The Monetary Policy Committee (MPC) of the Central Bank of the Republic of Turkey, or CBRT, headed by Governor Hafize Gaye Erkan, decided to hike the policy rate from 15% to 17.5%.

However, that was less than an increase to 20% that economists had forecast.

At its previous meeting in June, the MPC raised the interest rate by a massive 650 basis points in its first meeting under its newly appointed chief. That was the first hike in more than two years.

Recent official data showed that the country's consumer price inflation eased to an 18-month low of 38.21% in June, but was still elevated and well above the target range of the central bank.

The bank urged that the MPC maintain the rate in such a way that it creates the monetary and financial circumstances required to achieve a reduction in the underlying trend of inflation and a medium-term inflation objective of 5%.

The CBRT reiterated that monetary tightening will be increased if appropriate in a timely and gradual way until a considerable improvement in the inflation outlook is achieved.

Indicators of inflation and the underlying trend of inflation will be closely monitored, and the MPC will continue to decisively use all the tools at its disposal in line with its main objective of price stability, the bank said in a statement.

Photo: MIA archive