The central bank of Turkey decided to keep its main rates unchanged at their current levels despite the sharp depreciation of TRY due to political uncertainty and security concerns.

Accordingly, the benchmark rate (one-week repo) was kept at 7.5%, while the ON borrowing and ON lending rates were maintained at 7.25%, and 10.75, respectively.

Most of the economists surveyed by Reuters and CNBC-e had not expected any rate move by the central bank. Following the central bank’s rate decision, TRY weakened further against the dollar.

Processed food and energy price developments affect inflation favourably in the short run, while exchange rate movements delay the improvement in the core indicators, said the bank in a statement released after the monetary policy committee meeting. Considering this delay and taking into account the uncertainty in domestic and global markets and the volatility in energy and food prices, the Committee decided to implement a tighter liquidity policy as long as deemed necessary, added the statement.

“Future monetary policy decisions will be conditional on the improvements in the inflation outlook. Inflation expectations, pricing behaviour and other factors that affect inflation will be monitored closely and the cautious monetary policy stance will be maintained, by keeping a flat yield curve, until there is a significant improvement in the inflation outlook,” reiterated the bank.

The committee also discussed the roadmap to be implemented before and after global monetary policy normalization and decided to publish a strategy document on the bank’s website, said the bank.