By Xavier Fontdegloria

The Turkish central bank on Thursday kept its policy rate on hold at 14% as expected even as inflation reached a two-decade high and the value of its currency is declining.

Turkey's annual inflation stood at 70.0% in April, the highest since February 2002, driven by sharp falls in the lira, energy tariff hikes, and the recent jump in global commodity prices due to the war in Ukraine. Economists expect inflation to keep advancing in the coming months.

Turkey's central bank has left interest rates on hold since its meeting in December, after a series of interest rate cuts between September and December.

"[Turkey's central bank] will continue to use all available instruments decisively within the framework of liraization strategy until strong indicators point to a permanent fall in inflation," it said.

Economists don't expect a change in Turkey's current monetary policy stance toward taming inflation and stabilizing the lira, as President Recep Tayyip Erdogan doubles down on the unorthodox strategy to keep rates low.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

May 26, 2022 07:29 ET (11:29 GMT)