At its 18 April meeting, the Central Bank of the Republic of Turkey (CBRT) left the one-week policy rate unchanged at 5.75%, as was expected by the market. The Central Bank also held the overnight borrowing rate steady at 5.00%, and left the overnight lending rate at 11.50% (11.00% for primary dealers). The Bank reiterated that a rebalancing process between external and domestic demand continues and therefore the current account balance is expected to continue to improve. The CBRT explained that inflation developments remain broadly in line with the projected path. However, monetary authorities added that inflation may hover above the envisaged path in the short term due to hikes in energy prices. Against this backdrop, the Bank stepped up its hawkish rhetoric, stating that
Turkey Monetary Policy
Central Bank remains on hold but increases hawkish rhetoric
April 20, 2012
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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).
Turkey Economic News
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The current account balance recorded a USD 1.8 billion deficit in August (July: USD 2.7 billion deficit).
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The Manufacturing Purchasing Managers’ Index (PMI), produced by the Istanbul Chamber of Industry (ICI) and IHS Markit, increased slightly to 48.3 in September from August’s 47.0, which had marked a multi-year low.
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The Real Sector Confidence Index published by the Central Bank increased from August’s 103.6 to 106.5 in September.