Turkey Leaves Repo Rate Unchanged at 7.5%

Turkish central bank kept its benchmark one-week repo rate on hold at 7.5 percent on March 24th, saying that it will maintain the tight monetary policy stance considering the current inflation expectations and pricing behavior. Inflation rate was last recorded at 8.8 percent in February of 2016, after hitting a 20-month high of 9.6 percent in January. The central bank cut the overnight lending rate to 10.5 percent and kept the overnight borrowing rate at 7.25 percent.

Statement by the Central Bank of the Republic of Turkey:

Annual loan growth continues at reasonable rates in response to the tight monetary policy stance and macroprudential measures. The favorable developments in the terms of trade and the moderate course of consumer loans contribute to the improvement in the current account balance. Demand from the European Union economies continues to support exports at an increasing pace, despite elevated geopolitical risks in other export markets. The Committee assesses that the implementation of the announced structural reforms would contribute to the potential growth significantly.

Recently, global volatility has eased to some extent. Moreover, with the use of the policy instruments laid out in the road map published in August 2015 effectively, the need for a wide interest rate corridor has been reduced. In this respect, the Committee decided to take a measured step towards simplification. However, improvement in the underlying core inflation trend remains limited, necessitating the maintenance of a tight liquidity stance.

Future monetary policy decisions will be conditional on the inflation outlook. Taking into account inflation expectations, pricing behavior and the course of other factors affecting inflation, the tight monetary policy stance will be maintained. 

Turkey Leaves Repo Rate Unchanged at 7.5%

Central Bank of Turkey | Joana Ferreira | joana.ferreira@tradingeconomics.com
3/24/2016 12:26:33 PM