Turkey Leaves Rates Unchanged


Turkish central bank left its benchmark one-week repo rate on hold at 8.25 percent in December, saying current policy stance will be maintained until there is a clear improvement in inflation outlook.

The marginal funding rate was left on hold at 11.25 percent; the interest rate on borrowing facilities provided for primary dealers via repo transactions was kept at 10.75 percent, and the borrowing rate at 7.5 percent. The late liquidity window borrowing rate was kept at 0 percent and the lending rate was left steady at 12.75 percent.

Statement by the Central Bank of the Republic of Turkey:

Loan growth continues at reasonable levels 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 will contribute to the improvement in the current account balance. External demand remains weak, while the contribution of domestic demand to growth is at moderate levels. The Committee assessed that the implementation of the announced structural reforms would contribute to the potential growth significantly.

Macroprudential measures taken at the beginning of the year and the tight monetary policy stance continue to have a favorable impact on the core inflation trend. Moreover, declining commodity prices, in particular oil prices, will contribute to disinflation.

Under the current monetary policy stance, the Committee anticipates that, inflation will decline in line with the forecast presented in the Inflation Report throughout 2015, at a faster pace in the first half of the year. Inflation expectations, pricing behavior and other factors that affect inflation will be closely monitored and the tight monetary policy stance will be maintained, by keeping a flat yield curve, until there is a significant improvement in the inflation outlook.

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

Turkey Leaves Rates Unchanged


Central Bank of Turkey | Joana Taborda | joana.taborda@tradingeconomics.com
12/24/2014 12:40:07 PM