Turkey: Central Bank stays put in June
June 18, 2013
At its 18 June meeting, the Central Bank of the Republic of Turkey (CBRT) decided to maintain the one-week repo rate at 4.50%, in a move that was expected by market analysts. Simultaneously, the Bank also kept the overnight borrowing rate at 3.50% and the overnight lending rate at 6.50% (6.00% for primary dealers).
The Central Bank acknowledged that domestic demand is on a recovery path, while exports are slowing due to weak global economic activity. Moreover, the Bank noted that capital inflows moderated due to uncertainty regarding global monetary policies, in a reference to the possibility that the U.S. Federal Reserve will taper its quantitative easing programme sooner than previously expected. Against this backdrop, the Committee adopted a more hawkish stance, stating that "ongoing uncertainties regarding the global economy and the volatility in capital flows necessitate the monetary policy to remain flexible in both directions".
FocusEconomics Consensus Forecast panellists see the Central Bank rising the one-week repo to 4.67% by the end of this year. For 2014, the panel expects the rate to rise to 5.35%.