By Ed Frankl
Turkey's central bank on Thursday raised its key interest rate for the fifth consecutive time, flagging higher inflation than expected in the third quarter alongside geopolitical developments in the Middle East that risk higher oil prices.
The central bank raised the country's benchmark interest rate, the one-week repo rate, to 35% from 30%. The bank has been steeply lifting rates since June this year.
"The committee decided to continue the monetary tightening process in order to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behavior," the bank said.
The rise is a little higher than expectations of 33.5%, according to a consensus of economists polled by FactSet.
Domestic demand and sticky services inflation continue to put upward pressure on inflation, which were above expectations in the third quarter, the bank said. Developments in geopolitics also pose risks to inflation via higher oil prices, it said.
The central bank's decision comes after Turkey's annual inflation picked up in September to nearly 62%, from 59% in August, indicating the challenge for policy makers in the country of nearly 85 million people.
Nevertheless, the hike continues what many see as a return to more orthodox monetary policy under Governor Hafize Gaye Erkan, a former executive of First Republic Bank and Goldman Sachs.
The Turkish lira has fallen more than 30% against the dollar since the start of the year.
Write to Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
10-26-23 0727ET
