Turkey's central bank on Tuesday kept its key interest rates unchanged, following two consecutive reductions in the previous months, after economic growth accelerated in the first quarter. The decision was in line with economists' forecast.

Justifying the decision, the bank said that domestic demand has been showing improvement and the impact of weak export demand has eased.

The central bank retained its one-week repo rate at 4.5 percent in the latest rate-setting session. The bank had lowered the rate by 50 basis points each at the previous two meetings as part of its efforts to contain the fast appreciation of the lira and to prop up the faltering economy.

The bank also maintained its overnight lending rate, which is the upper end of the interest-rate corridor, at 6.5 percent, after reducing it five times in a row. The borrowing rate was kept unchanged at 3.5 percent.

The country's economic growth accelerated to 3 percent year-on-year in the first quarter from 1.4 percent a quarter ago.

Turkey's annual inflation accelerated to 6.54 percent in May from 6.13 percent in April, which was lower than 6.88 percent forecast by economists.

RTTNews