By Ed Frankl

Turkey's central bank on Thursday raised its key interest rate for the seventh consecutive time, but slowed the pace of the rise, signaling that monetary tightness was close to the rate required to slow inflation.

The central bank raised the country's benchmark interest rate, the one-week repo rate, to 42.5% from 40%, matching expectations from a consensus of economists polled by FactSet.

It came after Turkish inflation edged up in November to 62% from 61% in October, having continued to rise through the summer.

The bank said the level of domestic demand, stickiness in services inflation, and geopolitical risks continues to keep inflation pressures alive.

However, recent indicators have also suggested that domestic demand continues to ease as monetary tightening impacts the economy more clearly, it added.

"Assessing that monetary tightness is significantly close to the level required to establish the disinflation course, the [monetary policy] committee reduced the pace of monetary tightening," the bank said.

The inflation trend was also helped by continued increases in foreign-exchange reserves, a current-account surplus and the accelerated increase in domestic and foreign demand for lira-denominated assets, it added.

The lira has fallen 36% against the U.S. dollar in the year to date.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

December 21, 2023 06:27 ET (11:27 GMT)