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19.08.201023:41:00UTC+00Turkey Central Bank Keeps Interest Rates On Hold

Turkey's central bank on Thursday decided to maintain interest rates unchanged citing risks in the global economy and high unemployment.

The Central Bank of the Republic of Turkey left its overnight borrowing rate unchanged at 6.50% as expected, while the lending rate was also retained at 9.00%. The one-week repo auction rate was maintained at 7.00%.

In a statement, the central bank said that it would be necessary to maintain policy rates at current levels "for some time" with external demand looking uncertain and unemployment remaining high. The bank added that inflation would increase temporarily in the short-term before falling again in the final quarter of the year.

The policy committee said core inflation would continue to remain consistent with medium-term targets. In light of these developments, rates may have to be kept "at low levels for a long period," the bank said.

The Turkish economy expanded 11.7% annually between January and March, the strongest pace of growth in nearly six years. But the central bank has held off from raising interest rates as it seeks to consolidate the recovery.

The country has seen strong economic growth after it averted an economic collapse in 2002 by agreeing a strict recovery program with the International Monetary Fund. Since then, inflation has fallen rapidly, although unemployment and foreign debt remain major problems.

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