No Changes this Time in Turkish Monetary Policy Settings

April 18, 2012

Officials at the Reserve Bank of the Republic of Turkey retained levels of 5.75% in the 7-day repo rate, which is the key policy rate, 5.0% in the overnight borrowing rate, and 11.5% in the overnight lending rate.  The last changes in the 1-week repo rate and the overnight borrowing rate were made last August 4 when the first of these was reduced by 50 basis points (bps) and the latter lever was raised by 350 bps.  The late time the overnight lending rate changed was on February 21 when such was cut by 100 bps.  Officials also did not change any of these settings at the previous policy meeting on March 27.

A statement released today sounds a hawkish note about inflation risks and the possibility of having to tighten policy in the future if elevated energy costs spawn second-order inflation: “Inflation may hover above the envisaged path in the short term due to hikes in energy prices. The Committee will not tolerate temporary factors to have an adverse impact on the inflation outlook. Accordingly, it was underscored that additional monetary tightening may be implemented more frequently in the forthcoming period.”

The next policy meeting is scheduled for May 29.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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