Turkey: Central Bank leaves interest rates unchanged in December
December 20, 2016
At its 20 December monetary policy meeting, the Central Bank of the Republic of Turkey (CBRT) decided to leave the marginal funding rate unchanged at 8.50%. At the same time, the one-week repo rate was held at 8.00%, while the overnight borrowing rate was kept at 7.25%.
The Bank commented that recently released GDP data indicate a deceleration of the Turkish economy in the third quarter. However, the Bank expects economic activity to recover in the final quarter of the year thanks to accommodative domestic policy measures, as well as strong demand for Turkish exports among countries in the European Union. According to the Bank, the structural reforms being undertaken by the Turkish government should also raise the country’s long-run growth potential.
The Central Bank painted a mixed picture with regards to inflation, with the effects of an increase in the oil price and a fall in the value of the lira due to heightened global uncertainty being offset by sluggish domestic demand. The Bank commented that it will monitor future price developments closely and maintain its cautious monetary policy stance.
Author: Oliver Reynolds, Economist