Central Reserve Bank of the Republic of Turkey Eases Again

July 20, 2016

The unsuccessful coup in Turkey did not restrain Turkish monetary policymakers from taking another step in their campaign to narrow the overnight lending/borrowing interest rate corridor by cutting the lending rate but leaving the deposit rate unchanged. The latest 25-basis point borrowing rate reduction brings the cumulative decline of such to 200 basis points since March to 8.75%.  The overnight borrowing rate all this time has stayed at 7.25%, and the one-week interest rate has been at 7.5%.  A statement from the central bank reiterates a determination to retain a tight policy stance: “The Committee has indicated that inflation may display a marked increase in the short term due to developments in unprocessed food and tobacco prices. Meanwhile, the core inflation trend is expected to improve gradually. Yet, the developments in inflation outlook necessitate the maintenance of a tight liquidity stance.”

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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