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Turkey's central bank to adjust monetary stance as annual inflation nears 18%

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Turkey's central bank to adjust monetary stance as annual inflation nears 18%

Turkey's central bank said it will adjust its monetary stance at its September meeting as recent inflation data showed "significant risks to price stability."

"The central bank will take the necessary actions to support price stability. Accordingly, in line with the previous communication, monetary stance will be adjusted at the September monetary policy committee meeting in view of the latest developments," Türkiye Cumhuriyet Merkez Bankasi AS said in a Sept. 3 statement. The central bank's policymakers are due to meet Sept. 13.

Annual inflation accelerated to 17.90% in August — the highest level since December 2003 — from 15.85% in July, data from the Turkish Statistical Institute showed.

The Turkish lira was down 1.05% against the U.S. dollar as of 5:29 a.m. ET on Sept. 3.

The central bank has refused to raise its key interest rate in nearly three months despite a continued slide in the lira, which has depreciated more than 42% against the dollar this year.

Investors have been concerned about President Recep Tayyip Erdogan's hold over the country's central bank, adding further pressure to the currency. Erdogan is a known critic of high interest rates.

But Turkish Finance Minister Berat Albayrak told Reuters that the central bank remains independent and that Erdogan's re-election in June has strengthened the bank's hand.

"The central bank in Turkey has been maybe more independent than those in other countries, and it will continue this period by taking steps to continue this independence," Albayrak reportedly said.

Albayrak also said a selloff in the lira poses no risks to Turkish banks and dismissed concerns over the country's debt levels.