ISTANBUL, July 24 (Reuters) - Turkey’s central bank left its policy rate unchanged on Tuesday, bucking expectations of an increase after inflation spiked to a 14-year high in June, a move that is likely to further unsettle investors about the direction of monetary policy.
The bank left its one-week repo rate at 17.75 percent. Fifteen of 16 economists in a Reuters poll had forecast an increase, with an increase of 100-125 basis points seen as the most likely option.
The lira, which have lost some 20 percent of its value so far this year, weakened to 4.91 against the dollar following the decision, from 4.7605 directly before.
The lira has been battered by concerns about President Tayyip Erdogan’s influence over monetary policy after he assumed sweeping executive powers in June, and about the central bank’s ability to rein in inflation.
Inflation hit its highest in 14 years in June, at 15.39 percent, as the weakening lira drove up food and other prices.
The central bank has hiked interest rates by 500 basis points since late April in an effort to put a floor under the currency. Erdogan, who wants to see lower borrowing costs to spur lending and new construction, has unnerved investors with his calls for lower interest rates.
He has appointed his son-in-law Berat Albayrak to the post of treasury and finance minister, deepening concerns about the outlook for monetary policy. (Reporting by Daren Butler and Ezgi Erkoyun; Editing by David Dolan)