Results of Turkey’s Central Bank Meeting

May 18, 2010

The Central Bank of the Republic of Turkey switched its operative interest rate to the 7-day repo rate, which remains at 7.0%, and left all other interest rates including the 6.5% overnight borrowing rate, which used to be the targeted rate, unchanged as well.  This is a preannounced preparatory step to enable officials to gradually reabsorb excessive liquidity.  The central bank implemented 1025 basis points of rate cuts from November 2008 to November 2009 but no changes more recently.  Today’s statement from the central bank mentions lingering global economic uncertainties and reiterates the need to maintain rates at current levels for some time and to “keep them at a low level for a long period.”  Special factors have lifted inflation, which officials expect to settle back into its comfort zone as it will be quite a while before capacity usage rises to pre-crisis levels.  The jobless rate exceeds 14%.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.

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