Turkish Monetary Policy On Hold for "a Long Period of Time"

February 16, 2010

The Central Bank of the Republic of Turkey left its key borrowing and lending rates at 6.5% and 9.0%, respectively.  Those levels were reached after a 25-bp rate cut last November.  Previously, the borrowing rate was slashed from a peak of 16.75% prior to November 2008, dropping by 50 basis points that month, 125 bps in December 2008, 200 bps in January 2009, 150 bps in February, 100 bps in March, 75 bps in April, 50 bps in each of the ensuing six months to October, and 25 bps in November.  A statement today from monetary officials attributed the acceleration of CPI inflation from 6.5% at end-2009 to 8.2% last month to continuing base effects and tax increases and predicted a further increase in February.  But officials have maintained that core inflation remains okay, and they continue to highlight the potential risk of global uncertainties to the economic recovery.  Therefore, the promise was repeated that central bank interest rates will continue at the low levels “for a long period of time.”

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



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