Turkey Hikes Late Liquidity Window Rate to 12.75%

The Central Bank of Turkey held its benchmark one-week repo rate at 8 percent and raised its late liquidity window rate by a less-than-expected 50bps to 12.75 percent on December 14th, in an attempt to curb rising inflation amid strong economic growth. Annual inflation rate hit a 14-year peak of 12.98 percent last month, way above the central bank's target of 5 percent, and core inflation hit a near record high of 12.08 percent.
Central Bank of Turkey | Joana Ferreira | joana.ferreira@tradingeconomics.com 12/14/2017 11:14:25 AM
The overnight lending rate was kept at 9.25 percent and the overnight borrowing rate at 7.25 percent.

Statement by the Central Bank of the Republic of Turkey:

During year 2017, aggregate demand conditions have displayed a strong course and credit has shown rapid growth. Recently released data indicate that economic activity maintains its strength. Domestic demand conditions keep improving and external demand continues to contribute positively to exports.

Current elevated levels of inflation and recent developments in cost factors have increased the risks on expectations and the pricing behavior. Accordingly, the Committee decided to tighten the monetary policy stance.

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 Hikes Late Liquidity Window Rate to 12.75%