Turkey Leaves Monetary Policy Unchanged


Turkish central bank left its benchmark one-week repo rate on hold at 7.5 percent in May, as expected by markets. Policymakers showed concern over the high levels of inflation, that has been on an upward trend since the beginning of the year.

Other MPC decisions were to retain the overnight borrowing rate at 7.25 percent; to keep the overnight lending rate at 10.75 percent; and to maintain the primary dealers'overnight borrowing rate at 10.25 percent. 

Statement by the Central Bank of the Republic of Turkey:

Loan growth continues at reasonable levels in response to the tight monetary policy stance and macroprudential measures. The favorable developments in the terms of trade and the moderate course of consumer loans contribute to the improvement in the current account balance. External demand remains weak, while domestic demand contributes to growth moderately. The Committee assesses that the implementation of the announced structural reforms would contribute to the potential growth significantly.

The ongoing cautious monetary policy along with prudent fiscal and macroprudential policies continue to have a favorable impact on inflation, especially inflation excluding energy and food (core inflation indicators). However, recently elevated volatility in the exchange rates has limited the improvement in the core inflation, as stated in the Inflation Report. This, combined with the uncertainty in global markets and volatility in energy and food prices, makes it necessary to maintain the cautious stance in monetary policy. Accordingly, the Committee has decided to keep the interest rates at current levels.

Future monetary policy decisions will be conditional on the improvements in the inflation outlook. Inflation expectations, pricing behavior and other factors that affect inflation will be monitored closely and the cautious monetary policy stance will be maintained, by keeping a flat yield curve, until there is a significant improvement in the inflation outlook.

It should be emphasized that any new data or information may lead the Committee to revise its stance.

Turkey Leaves Monetary Policy Unchanged


Central Bank of Turkey | Joana Ferreira | joana.ferreira@tradingeconomics.com
5/20/2015 12:32:51 PM