As widely expected, the central bank of Turkey kept its main interest rate (one-week repo) steady at 7.5% and left the overnight borrowing and the overnight lending rates unchanged at 7.25%, and 10.75%, respectively, citing uncertainty in global markets and volatility in energy and food prices.

Inflation is expected to decline in the short term owing to a partial correction in food prices, said the bank in a statement on June 23, adding, however, that recent movements in the exchange rates have delayed the improvement in the core indicators.

This recent movement in exchange rates, combined with the uncertainty in global markets and volatility in energy and food prices, makes it necessary to maintain the cautious stance in monetary policy, added the bank.

Inflation expectations, pricing behaviour and other factors that affect inflation will be monitored closely and the cautious monetary policy stance will be maintained until there is a significant improvement in the inflation outlook, the bank reiterated but noted that any new data or information may lead the bank to revise its stance.

External demand remains weak, and domestic demand contributes to growth moderately, according to the bank.

The central bank’s rate decision came a day after economy minister Nihat Zeybekci renewed his call for lower interest rates. The government meddling with the central bank’s policies have unnerved investors, causing doubts about the bank’s independence.