The Central Bank also left the overnight interest rate at 12.0 percent, and the overnight borrowing rate at 8 percent, while the late liquidity lending rate was reduced to 13.5 percent from 15 percent.
Statement by the Central Bank of Turkey:
The Committee assessed that the strong and frontloaded monetary tightening delivered at the January interim meeting has contained the adverse impact of upside risks on the medium term inflation expectations. Inflation expectations and pricing behavior will be closely monitored and the tight monetary policy stance will be maintained until there is a significant improvement in the inflation outlook.
Recent decline in uncertainties and partial improvement in the risk premium indicators have reduced the need for an additional tightening in liquidity policy. Accordingly, the Committee decided to deliver a technical cut in the late liquidity window lending interest rate.
Loan growth continues to slow down in response to the tight monetary policy stance and recent macro prudential measures. In line with these developments, the data regarding the first quarter of 2014 indicate some deceleration in private final domestic demand. Meanwhile, with the help of the recovery in foreign demand, the contribution of net exports to economic growth is expected to increase. The Committee expects that such a demand composition will support disinflation and lead to a significant improvement in the current account deficit in 2014.
It should be emphasized that any new data or information may lead the Committee to revise its stance.