Turkey Monetary Policy


Turkey: Central Bank stays put in November

November 21, 2014

At its 21 November monetary policy meeting, the Central Bank (CBRT) decided to maintain the one-week repo rate at 8.25%. The decision was broadly expected by the market. The Bank also left the borrowing rate unchanged at 7.50%, the marginal funding rate at 11.25%, and the interest rate on borrowing facilities provided for primary dealers at 10.75%.

Similar to its previous statement, the Central Bank pointed out that loan growth remains at reasonable levels against a backdrop of tight monetary policy and macroprudential measures. Regarding external developments, the Bank stated that global demand is still weak, but that favorable terms of trade will continue to contribute to rebalancing the current account. Domestically, monetary authorities recognized that growth in domestic demand continues to rise. Regarding consumer price developments, the Central Bank underscored that the current monetary policy stance is keeping inflation pressures contained. However, the CBRT recognized that elevated food prices are delaying an improvement in the country’s inflation outlook. Nonetheless, the Bank sees that the current fall in oil prices will contribute to alleviating inflation pressures going forward.

The Bank reaffirmed its tight monetary policy stance by, “keeping a flat yield curve, until there is a significant improvement in the inflation outlook.” The next monetary policy meeting is scheduled for 24 December.

FocusEconomics Consensus Forecast panelists see the one-week repo rate ending the year at 7.83%. For 2015, the panel expects the rate to rise to 8.80%. Meanwhile, FocusEconomics Consensus Forecast panelists see the marginal funding rate ending the year at 11.35%. For 2015, the panel expects the rate to decline slightly to 11.25%.

Author: Ricard Torné, Lead Economist

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Turkey Monetary Policy Chart

Turkey Monetary Policy November 2014

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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