Central Bank of the Republic of Turkey Holds Its Fire

December 22, 2011

Officials at Turkey’s central bank left all policy settings unchanged including the 5.75% one-week repo rate.  A statement released today presents a mixed set of objectives and gives little clue to the timing of subsequent actions.

Tight monetary policy should be maintained for a while in order to keep inflation outlook consistent with the medium term targets.  However, given the prevailing uncertainties regarding global economy, it would be
appropriate to preserve the flexibility of monetary policy. Therefore, the impact of the measures undertaken on credit, domestic demand, and inflation expectations will be monitored closely and the amount of Turkish lira funding via one-week repo auctions will be timely adjusted on either direction, if needed.

Copyright 2011, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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