(Recasts, adds analyst comment, lira, context)
ANKARA Feb 9 Turkey's central bank will stick
to a tight policy stance until inflation eases, its governor
said on Thursday, offering some clarity to investors about its
commitment to new measures introduced last month to shore up the
Rather than hiking a single benchmark rate in the face of
rising inflation and a weakening lira, the central bank has
adopted a system of multiple rates. Last month it upped the
complexity with additional measures, including closing off some
People familiar with the bank's thinking have told Reuters
it will continue with those unorthodox measures at least until a
peak in inflation expected later this year.
"The current policy stance indicates a clear and stable
tightening which will be preserved until there is a significant
improvement in inflation dynamics," Governor Murat Cetinkaya
said in a speech to investors in London, according to a summary
of his comments released by the bank.
The central bank would continue to use all available
instruments in pursuit of price stability, he said, adding
inflation may further edge up in the short term before gradually
easing to 8 percent at the end of the year.
The lira, one of the worst performing emerging market
currencies over the past two years, firmed nearly 1 percent to
3.6850 against the dollar on Thursday.
"The central bank governor's speech ...may have affected
lira's performance positively," said Erkin Isik, a strategist at
TEB BNP Paribas. "If the markets are convinced that the bank
will maintain its tight policy, we may see further
President Tayyip Erdogan, who wants cheaper credit to fuel
consumption and revive the economy, has declared himself an
"enemy" of interest rates.
As well as worries that Erdogan's views may impinge on the
central bank's independence, the Turkish currency has been hit
by concerns about security, political uncertainty and a slowing
(Reporting by Nevzat Devranoglu, Behiye Selin Taner, Ece
Toksabay; Writing by David Dolan; Editing by Daren Butler and