Turkey Leaves Rates on Hold

At its March 18th, 2014 meeting, the Central Bank of Turkey decided to leave the benchmark repo rate unchanged at 10 percent and the overnight lending rate at 12 percent, as January’s rate hike helped to stabilize the lira.

Statement by the Central Bank of Turkey:

The Committee highlighted the upside risks on the inflation outlook and assessed that the strong and frontloaded monetary tightening delivered at the January interim meeting has contained the adverse impact of such risks on the medium term inflation expectations. Yet, inflation is expected to increase until June, partly reflecting base effects. Against this backdrop, inflation expectations and pricing behavior will be closely monitored and the tight monetary policy stance will be maintained until there is a significant improvement in the inflation outlook. 

Loan growth continues to slow down in response to the tight monetary policy stance, recent macroprudential measures, and weak capital flows. In line with these developments, the data regarding the first quarter of 2014 indicate some deceleration in private final domestic demand. Meanwhile, with the help of the recovery in foreign demand, the contribution of net exports to economic growth is expected to increase. The Committee expects that such a demand composition will support disinflation and lead to a significant improvement in the current account deficit in 2014. 

It should be emphasized that any new data or information may lead the Committee to revise its stance.  

Turkey Leaves Rates on Hold

Central Bank of Turkey | Joana Taborda | joana.taborda@tradingeconomics.com
3/18/2014 12:44:53 PM