Turkey Monetary Policy


Central Bank maintains rates unchanged

At its 19 November monetary policy meeting, the Central Bank of the Republic of Turkey (CBRT) decided to keep the one-week repo rate at 4.50%, a decision that was in line with market expectations. The Bank also maintained the overnight borrowing rate at 3.50% and the overnight lending rate for non-primary dealers at 7.75% (primary dealers: unchanged at 6.75%). That said, the CBRT cancelled the one-month repo auctions and thus expects interbank money rates to settle around 7.75%. With this move, the Bank "strengthened" its cautious stance. In its statement, the Central Bank reaffirmed that domestic demand continues to grow at a moderate pace and that the current policy framework is contributing to improving the current account deficit. Regarding price developments, the Bank stated that inflation will hover above the Central Bank's target, "for some time," as a result of recent exchange rate volatility. The Monetary Policy Committee stated that its current cautious stance - which may include additional monetary tightening - will remain in place until inflation returns to the Bank's medium-term target. FocusEconomics Consensus Forecast panelists see the one-week repo rate ending the year at 4.61%. For 2014, the panel expects the rate to rise to 5.46%.

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Turkey Monetary Policy Chart

Turkey Monetary Policy November 2013

Note: 1-week repo rate in %, from 25 May 2010 onwards. From January 2008 until 25 May 2010, data refer to overnight borrowing rate.
Source: Central Bank of the Republic of Turkey (CBRT).

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