Turkey Monetary Policy July 2017


Turkey: Central Bank keeps interest rates constant in July

July 27, 2017

The Central Bank of the Republic of Turkey (CBRT) held firm on its tight stance on monetary conditions observed in previous meetings at its 27 July monetary policy meeting. The Committee voted to hold the one-week repo rate steady at 8.00%, the overnight lending rate at 9.25% and the overnight borrowing rate at 7.25%. The lending rate will remain at 12.25% under the Late Liquidity Window. The decision was in line with market expectations.

In the press release from the CBRT, comments were provided on the recent rebound in economic growth, particularly due to a strong performance in exports as a result of growing demand in the EU and strengthening domestic demand fueled by the government’s supportive measures. Inflation has fallen over the last two months, however high inflation rates still pose a risk to the monetary aims of the Bank.

Overall the general tone of the meeting remained cautious. The Bank’s main objective is to ensure price stability and improve the inflation outlook by closely monitoring shifts in pricing behaviors and inflation expectations. Against this backdrop, the CBRT is expected to keep interest rates high as long as inflation remains elevated, a view that is further reinforced as political pressure to lower rates wanes.

FocusEconomics Consensus Forecast panelists see the one-week repo rate ending the year at 8.71%. For 2018, the panel expects the rate to end the year at 8.66%. Panelists see the marginal funding rate ending the year at 10.13%. For 2018, the panel expects the rate to rise to 10.38%.

Author:, Economist

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Turkey Monetary Policy Chart

Turkey Monetary Policy July 2017

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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