Turkish cenbank holds rates at 19% under Erdogan's new chief

·1 min read

ISTANBUL, April 15 (Reuters) - Turkey's central bank held its key interest rate steady at 19% on Thursday, as expected, in its first policy decision after President Tayyip Erdogan abruptly fired the hawkish former governor and set off a market selloff.

In its post-meeting statement, the bank did not repeat last month's pledge to deliver more tightening if needed.

Erdogan's removal of Naci Agbal last month sent foreign investors fleeing on concerns he would quickly slash rates. But new governor's recent promises of tight policy - and a more than 10% drop in the lira - convinced analysts policy would remain steady for now.

In a Reuters poll, all but two of 19 economists forecast the bank under Governor Sahap Kavcioglu would keep its one-week policy rate unchanged this week, before easing likely after mid-year.

One predicted a cut to 18.50% and another to 17%.

Last month, Agbal had raised rates by a more than expected 200 basis points to levels last touched in mid-2019, to address inflation that is above 16% and to support the currency.

Before taking the job, Kavcioglu had openly criticised the tight stance and espoused the president's unorthodox view that high rates cause inflation. Erdogan has abruptly fired three bank chiefs in two years, eroding monetary credibility. (Reporting by Ali Kucukgocmen and Ece Toksabay; Writing by Daren Butler; Editing by Jonathan Spicer)