Turkey Leaves Rates On Hold In December


The Central Bank of Turkey held its benchmark one-week repo rate at 8 percent on December 20th, following a 50bps increase in November. Policymakers said the recovery in the economic activity is expected to continue at a moderate pace while a weaker lira, which already lost 17 percent of its value against the dollar this year, and higher oil prices pose upside risks on the inflation outlook.

The central bank also kept its overnight lending rate at 8.5 percent and its overnight borrowing rate at 7.25 percent. 

Inflation was last recorded at 7 percent in November, well above central bank's 5 percent target, while Turkey's gross domestic product contracted for the first time in seven years in the third quarter of 2016.

Statement by the Central Bank of the Republic of Turkey:

Recently released data indicate that the economic activity has decelerated in the third quarter, before posting a partial recovery for the final quarter. Demand from the European Union economies continues to contribute positively to exports. With the supportive measures and incentives provided recently, the recovery in the economic activity is expected to continue at a moderate pace. The Committee assesses that the implementation of the structural reforms would contribute to the potential growth significantly.

Exchange rate movements due to recently heightened global uncertainty and the increase in oil prices pose upside risks on the inflation outlook. Yet, the aggregate demand developments restrain these effects. Developments will be closely monitored in order to make a sound assessment regarding the net impact of these factors.

Future monetary policy decisions will be conditional on the inflation outlook. Inflation expectations, pricing behavior and other factors affecting inflation will be closely monitored and the cautious monetary policy stance will be maintained.

Turkey Leaves Rates On Hold In December


Central Bank of Turkey | Joana Ferreira | joana.ferreira@tradingeconomics.com
12/20/2016 11:19:02 AM