(Bloomberg) -- Turkey softened its commitment to keeping monetary policy tight for an extended period even as the central bank kept interest rates on hold for a second meeting. The lira briefly rose and then erased all gains.

The Monetary Policy Committee led by Governor Murat Cetinkaya kept its benchmark at 24 percent on Thursday, in line with the forecasts of all economists surveyed by Bloomberg. In a departure from its previous language on the outlook for rates, the bank removed a reference to “decisively” maintaining restrictive policy.

“The committee has decided to maintain the tight monetary policy stance until the inflation outlook displays a significant improvement,” it said in a statement. “While developments in import prices and domestic demand conditions have led to some improvement in the inflation outlook, risks for price stability continue to prevail.”

The central bank has lately emphasized that tight policy was needed for an extended period of time but it still faces investor fears over a “premature” rate cut in the face of the downturn. Thursday’s tweak only adds to those concerns and might weigh on the currency after it’s already lost nearly a third of its value this year, Rabobank strategist Piotr Matys said after the decision.

“At the first glance, the statement published by the central bank is not significantly different compared to the one published in October,” Matys said by email. However, “the fact that the central bank dropped ‘decisively’ can fuel market speculation about an early rate cut.”

The currency climbed as much as 0.8 percent against the dollar after the decision but later erased all gains as the change in forward guidance sank in. It was trading 0.2 percent weaker at 5.3544 per dollar at 2:23 p.m. in Istanbul.

In the past, Turkey’s central bank has had to confront political pressure at home for lower borrowing costs. Meanwhile, investors have criticized it for being too quick to undo tightening and too slow to respond to risks, most recently in August when the lira lost about a quarter of its value.

--With assistance from Harumi Ichikura.

To contact the reporters on this story: Cagan Koc in Istanbul at ckoc2@bloomberg.net;Onur Ant in Istanbul at oant@bloomberg.net

To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Paul Abelsky, Amy Teibel

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