Another Cut in Turkey’s Overnight Central Bank Lending Rate
October 18, 2012
The Central Bank of the Republic of Turkey administers monetary policy with two interest rate levers. The main operative tool, the one-week repo rate was left unchanged at 5.75%, its level since a 50-basis point reduction in August 2011. The other lever is the differential between the overnight lending and overnight borrowing rate. The former has been cut by 50 basis points to 9.5%. It was also reduced by 150 basis points at the previous meeting on September 18 and by 100 bps last February. The overnight borrowing rate has been at 5.0% since a hike of 350 bps in August 2011. The spread between the two overnight rate becomes 450 bps, down from 750 bps at the start of 2012.
Turkey’s recorded excessive inflation of 9.2% in the year to September and deficient economic growth of 2.9% in the year to 2Q. Monetary officials expect inflation to recede this quarter but not all the way to the target ceiling. They have lately been most focused on supporting economic activity.
Copyright 2012, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Turkish Monetary Policy
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