Turkish central bank keeps rates on hold, policy to remain tight

The Turkish central bank kept its key interest rates unchanged today, but there are signs that policymakers have started to tighten monetary conditions via the interest rate “corridor” to counter the recent sell-off in the lira. High inflation and a large current account deficit mean we think policy is likely to remain tight. In contrast, in the Czech Republic, where interest rates were also left unchanged today, low inflation will allow monetary policy to remain extremely accommodative over the coming years.