Turkey Monetary Policy Unchanged in December

In its December 17th meeting, the Monetary Policy Committee of the Central Bank of the Republic of Turkey left the benchmark one-week repo rate unchanged at 4.5 percent. The overnight lending rate was also kept at 7.75 percent, the interest rate on borrowing facilities provided for primary dealers via repo transactions at 6.75 percent, and borrowing rate at 3.5 percent. The late liquidity window interest rates were unchanged at 0 percent (borrowing) and 10.25 percent (lending).

Statement of the Central Bank of Turkey:

Data released since the last meeting suggest that final domestic demand and exports continue to grow at a moderate pace. The present policy framework is contributing to the improvement in the current account balance. The cautious monetary policy stance, the announced macroprudential measures, and weak capital flows will bring down the loan growth rates to more reasonable levels. Accordingly, the moderate decline in the current account deficit excluding gold trade is expected to continue. 

Inflation is expected to fall further in the forthcoming period. However, core inflation indicators are likely to hover above the target for some time. The Committee assessed that the current stance of the monetary policy is appropriate to contain inflationary risks. Accordingly, it is indicated that interbank money market rates will materialize close to 7.75 percent and the weighted average cost of funding will materialize at 6.75 percent or above in the forthcoming period. 

The Committee stated that the cautious monetary policy stance should be maintained until the inflation outlook is in line with the medium term targets. It should be emphasized that any new data or information may lead the Committee to revise its stance. 

Turkey Monetary Policy Unchanged in December

Joana Taborda | joana.taborda@tradingeconomics.com
12/17/2013 3:21:12 PM