ISTANBUL, Oct 25 (Reuters) - Turkey’s central bank said on Thursday recent developments regarding the inflation outlook point to significant risks to price stability after it left interest rates unchanged as the lira stabilises.
“Although weaker domestic demand conditions will partially mitigate the deterioration in the inflation outlook, upside risks on pricing behaviour continue to prevail,” the bank said in a statement.
“Accordingly, the Committee has decided to maintain the tight monetary policy stance.”
The lira is currently down 34 percent against the dollar this year, having trimmed its losses after the central bank hiked rates by 6.25 percentage points and after diplomatic relations with Washington improved.
The diplomatic spat with the United States and concerns about President Tayyip Erdogan’s influence over monetary policy have driven the lira sell-off. (Writing by Ezgi Erkoyun; Editing by Daren Butler)