Turkey’s Central Bank Ends String of Interest Rate Cuts

A logo of Turkey's Central Bank (TCMB) is pictured at the entrance of the bank's headquarters in Ankara, Turkey April 19, 2015. REUTERS/Umit Bektas/File Photo
A logo of Turkey's Central Bank (TCMB) is pictured at the entrance of the bank's headquarters in Ankara, Turkey April 19, 2015. REUTERS/Umit Bektas/File Photo
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Turkey’s Central Bank Ends String of Interest Rate Cuts

A logo of Turkey's Central Bank (TCMB) is pictured at the entrance of the bank's headquarters in Ankara, Turkey April 19, 2015. REUTERS/Umit Bektas/File Photo
A logo of Turkey's Central Bank (TCMB) is pictured at the entrance of the bank's headquarters in Ankara, Turkey April 19, 2015. REUTERS/Umit Bektas/File Photo

Turkey´s central bank kept a key interest rate unchanged on Thursday, halting a string of rate cuts that triggered a currency crisis and sent consumer prices skyrocketing.

The bank´s Monetary Policy Committee said it decided to keep its policy rate "constant" at 14%, putting on hold a rate-cutting policy that has reduced borrowing costs by 5 percentage points since September despite soaring inflation. By contrast, many other central banks have increased rates to control surging prices, The Associated Press reported.

Turkish President Recep Tayyip Erdogan insists on lowering borrowing costs to boost growth. He has long argued that high interest rates cause inflation, even though economists say raising them is the way to tame soaring prices.

Erdogan has turned to unconventional measures to halt the depreciation of the Turkish lira instead of raising interest rates. The measures include a program that encourages people to keep their savings in lira through guarantees to compensate losses from the decline of the Turkish currency. Economists warn the system could put an extra burden on the treasury.

The lira, which lost around 45% of its value against the dollar last year, strengthened slightly against the U.S. currency following Thursday´s interest rate decision.

Inflation in Turkey surged 36% last month - reaching a 19-year high and leaving many in the country of nearly 84 million struggling to buy food and other basic goods.



Gazprom, CNPC Discuss Future Russian Gas Supplies to China

A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
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Gazprom, CNPC Discuss Future Russian Gas Supplies to China

A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo

The heads of Russia's Gazprom and China's energy company CNPC discussed future Russian gas supplies to China during talks in Beijing, Gazprom said on Friday, as Moscow seeks stronger ties with the world's biggest energy consumer.

Russia, the holder of world's largest gas reserves, has diverted oil supplies from Europe to India and China since the start of the conflict in Ukraine in February 2022, Reuters said.

At the same time, Russia's diversification of pipeline natural gas from the European Union has been slow.

It started gas exports to China via the Power of Siberia pipeline in the end of 2019 and plans to reach the pipeline's annual exporting capacity of 38 billion cubic meters this year.

Russia and China have also agreed on exports of 10 bcm of gas from Russia's Pacific island of Sakhalin starting from 2027.

However, years of talks about the Power of Siberia 2 pipeline, which would ship 50 bcm of gas per year to China via Mongolia, have yet to be concluded as the two sides disagree over issues such as the gas price.

Russian President Vladimir Putin is set to travel to China in early September to participate in celebrations marking the anniversary of the victory over Japan in World War II.

The trip follows Chinese President Xi Jinping's visit to Moscow in May.