Central Bank of the Republic of Turkey Cuts Overnight Interest Rates

January 22, 2013

While keeping the one-week benchmark repo rate unchanged at 5.5%, Turkish monetary officials reduced the overnight lending rate to 8.75% from 9.0% and the overnight borrowing rate to 4.75% from 5.0%.  At the prior meeting on December 18, the repo rate was changed for the first time in sixteen months, dropping 25 basis points.  Following a 350-bp hike in October 2011, the overnight lending rate had bee sliced by 100 bps in February 2012, 150 bps in September 2012, 50 bps in October 2012, and 50 bps in November 2012.   Today’s announced change in the overnight borrowing rate will be its first change since a 350-bp hike in August 2011.

Today’s cut in overnight rates leaves the lending-borrowing rate corridor at 400 basis points.  The reductions of overnight rates this month and of the one-week repo rate in December, also by 25 basis points, are justified in a statement that notes

  • Moderate economic growth,
  • A declining current account deficit,
  • A downtrend in CPI inflation.

The next Turkish interest rate announcement is scheduled for February 19, four weeks from today.

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



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