Turkey Monetary Policy


Central Bank remains on hold

At its 17 September 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%). In its statement, Central Bank argued that domestic demand continues to expand at a moderate pace and that the current policy framework is helping to improve the current account deficit (excluding the gold trade). While inflation is expected to decline further in the months ahead, the CBRT stated that recent exchange rate volatility poses upside risks to the inflation outlook. In addition, the Monetary Policy Committee maintained its hawkish tone, stating that its current cautious stance - which might include additional monetary tightening - will remain in place until inflation returns to the medium-term target. FocusEconomics Consensus Forecast panelists see the one-week repo rate ending the year at 4.75%. For 2014, the panel expects the rate to rise to 5.46%.

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Turkey Monetary Policy Chart

Turkey Monetary Policy September 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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