Central Bank of the Republic of Turkey

July 23, 2013

Turkish inflation had spiked more than a percentage point to 8.3% in June, fed partly by food and energy pressures, and Turkish monetary officials responded with a 75-basis point increase of the overnight lending rate to 7.25%.  The overnight borrowing rate was left at 3.5%.  Both rates had been cut earlier this year, including 50-bp reductions in both April and May.  In a statement, officials explained and forewarned

In order to support the price and financial stability, the Committee has decided to raise the upper bound of the interest rate corridor. Cautious stance will be maintained until the inflation outlook is in line with the medium term targets. In this respect, additional monetary tightening will be implemented when necessary.

The one-week repo rate, which is considered the main policy signal, was kept at 4.5%.  Such was reduced from 5.75% in three moves implemented in December 2012 and April and May of this year.

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



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