ISTANBUL, June 7 (Reuters) - Turkey’s central bank will decisively keep monetary policy tight until the inflation outlook displays a significant improvement, it said on Thursday, as it raised its policy rate by 125 basis points.
Elevated levels of inflation and inflation expectations continue to pose risks on the pricing behaviour, the bank said in a statement, adding it would tighten monetary policy more if needed.
“The Committee decided to further strengthen the monetary tightening to support price stability,” the bank said.
Concerns about President Tayyip Erdogan’s growing influence on monetary policy and doubts over the bank’s ability to rein in double-digit inflation have sent the currency down some 16 percent this year.
To stem the sell-off, the bank hiked rates by 3 percentage points at an emergency meeting last month and said it would return to a single policy rate. Investors have been expecting further tightening, particularly after data on Monday showed annual inflation quickened to 12.15 percent in May.
Writing by Ezgi Erkoyun; Editing by David Dolan and John Stonestreet