ANKARA, July 23 (Xinhua) -- Türkiye's central bank kept its benchmark rate unchanged at 37 percent on Thursday, as analysts warned that still-elevated inflation, rising energy costs and regional instability leave little room for monetary easing.
The widely expected decision extends the bank's cautious stance, despite annual inflation easing to 32.11 percent in June.
Analysts said the lingering effects of years of high inflation, renewed U.S.-Iran strikes and Türkiye's dependence on energy imports continue to complicate the policy outlook.
Senol Babuscu, an economist at Ankara-based Baskent University, said the central bank faces a difficult balance between supporting economic activity and ensuring inflation continues to decline.
"Although annual inflation has been easing, it is still far from levels that would justify a meaningful shift toward monetary easing," he told Xinhua, noting that inflation expectations remain above the central bank's projections, leaving little room for premature rate cuts.
Babuscu also highlighted the erosion of the lira's purchasing power, noting that as of June, 200-lira banknotes had accounted for 90 percent of the total value of banknotes in circulation, up from just 5.5 percent in 2009.
"The 200-lira note has effectively become Türkiye's main banknote," he said, making everyday cash transactions increasingly difficult.
Istanbul-based economist Atilla Yesilada said external developments have become a key factor shaping monetary policy.
"Türkiye imports almost all of its energy needs. Any sustained increase in oil prices or disruption to regional supply routes would feed directly into inflation and widen the current account deficit," he told Xinhua.
Yesilada does not expect a rate cut before October, adding that keeping rates unchanged also helps support the Turkish lira amid heightened global uncertainty.
According to the two analysts, the central bank is likely to remain data-dependent, closely monitoring inflation, domestic demand and global energy prices before considering any policy changes.
