Central Bank of the Republic of Turkey

June 18, 2013

Along side images from Syria and Afghanistan, the international press has been full of photos from Turkey over the past fortnight depicting extreme civil unrest — just the kind of backdrop one might expect to create volatile capital movements.  Today’s statement from the Central Bank of the Republic of Turkey observes capital flow volatility blames such on the “increasing uncertainty regarding global monetary policies,” not the standoff between government forces and rebels seeking a less authoritarian domestic political landscape.  The other notable aspect of today’s statement is that none of the three main central bank rates.  Last month, by contrast, the one-week repo, overnight borrowing and overnight lending rates were each cut by 50 basis points to 4.5%, 3.5% and 6.5%, respectively.  In April, the same-sized reductions were also made across the board.  In March, the overnight lending rate was reduced 100 basis points.  In both January and February, the two overnight rates were cut by 25 bps each.  The one-week repo rate was reduced at the December meeting.  And in September, October and November, cuts of 150 bps, 50 bps, and 50 bps were implemented in the overnight lending rates, while the other key rates were not changed. Until now, It had been ten months, in other words, since the last policy meeting not to decide to change one of the key rates.  Amid instability in other national affairs, this is one way to signal financial business as normal. 

The statement says that recent trends in domestic and foreign demand have conformed to the central bank’s expectations but promises to keep policy “flexible in both directions.”

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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