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ISTANBUL, May 26 (Reuters) - Turkey's lira slipped on Thursday to its weakest level since December ahead of a central bank meeting at which it is expected to hold its benchmark rate at 14% despite soaring inflation, depleted FX reserves and a protracted currency decline.
The lira is down nearly 20% this year, in addition to the 44% it lost last year, largely due to a December currency crisis sparked by a series of unorthodox rates cuts in the second half of 2021.
The currency hit 16.46 against the greenback in early trade and stood at 16.3950 at 0704 GMT, down some 0.3% from Wednesday's close.
All 15 economists in a Reuters poll predicted the bank would hold rates later on Thursday. Some predicted it would have to hike before the end of the year given continued pressure on the lira, price rises and tightening by other central banks.
President Tayyip Erdogan has urged monetary easing to boost credit and exports and to reverse Turkey's chronic current account deficit. But the deficits have only climbed due to rising energy costs and imports.
The surge in prices after years of double-digit inflation have rattled households and eroded Turks' savings. Led by energy and food prices, inflation hit a two-decade high of 70% last month and is expected to rise further with the weakening of lira.
"(T)he central bank is not really free to hike rates. In fact, had it not been for constant depreciation pressure on the lira exchange rate, (the bank) probably might have even cut the rate," Commerzbank said in a note.
"We stick with our view that as Turkey's real interest rate stays deeply negative, the next big move in USD-TRY is getting closer."
(Reporting by Ezgi Erkoyun and Jonathan Spicer; Editing by Jan Harvey)