Turkey Holds Key Interest Rate at 8% as Expected

The Central Bank of Turkey held its benchmark one-week repo rate at 8 percent on October 26th, as widely expected, saying rising inflation poses risks on the pricing behavior while the economic activity is expected to maintain its strength boosted by both domestic and external demand. Annual inflation rate came in at a four-month high of 11.20 percent in September, way above the central bank's target of 5 percent, and core inflation hit 10.89 percent, its highest level since February 2004.
Central Bank of Turkey | Joana Ferreira | joana.ferreira@tradingeconomics.com 10/26/2017 11:12:43 AM
Also, the central bank left its overnight lending rate unchanged at 9.25 percent; its overnight borrowing rate at 7.25 percent; and its late liquidity window rate at 12.25 percent.

Statement by the Central Bank of the Republic of Turkey:

Recently released data indicate a strong economic activity. Domestic demand conditions keep improving and demand from the European Union economies continues to contribute positively to exports. The Committee assesses that the implementation of the structural reforms would contribute to the potential growth significantly.

Current elevated levels of inflation and the developments on core inflation outlook continue to pose risks on the pricing behavior. Accordingly, the Committee decided to maintain the tight stance of monetary policy.

The Central Bank will continue to use all available instruments in pursuit of the price stability objective. Tight stance in monetary policy will be maintained decisively until inflation outlook displays a significant improvement and becomes consistent with the targets. Inflation expectations, pricing behavior and other factors affecting inflation will be closely monitored and, if needed, further monetary tightening will be delivered.

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

Turkey Holds Key Interest Rate at 8% as Expected