Turkey Monetary Policy November 2016

Turkey

Turkey: Central Bank tightens its policy in November

At its 24 November monetary policy meeting, the Central Bank of the Republic of Turkey (CBRT) decided to increase the marginal funding rate from 8.25% to 8.50%. At the same time, the one-week repo rate was increased from 7.50% to 8.00% while the overnight borrowing rate was kept at 7.25%. The next meeting is scheduled for 20 December.

The Bank commented that recently released data indicate a deceleration of the Turkish economy in the third quarter. However, economic activity is expected to recover in the final quarter of the year and the Bank expects that the recent implementation of structural reforms will support the economy significantly.

Regarding price developments, the Central Bank stated that the slowdown in aggregate demand contributes to the decrease in inflation figures. On the other hand, exchange rate volatility due to the recently heightened global uncertainty will push up inflationary pressures. As a result, the Bank decided to tighten its monetary policy in order to counteract the adverse impact of these developments on inflation.

FocusEconomics Consensus Forecast panelists see the one-week repo rate ending the year at 7.58%. For 2017, the panel expects the rate to rise to 7.73%. Panelists see the marginal funding rate ending the year at 8.50%. For 2017, the panel expects the rate to rise to 8.81%.


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Turkey Monetary Policy Chart


Turkey Monetary Policy November 2016

Note: 1-week repo rate, overnight borrowing rate and marginal funding rate in %.
Source: Central Bank of the Republic of Turkey (CBRT).


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