No Interest Rate Changes after Monthly Turkish Monetary Policy Committee Meeting

September 25, 2014

As expected, officials at the Central Bank of the Republic of Turkey left their signature 1-week repo rate at 8.25%, their overnight borrowing rate at 7.5%, and their overnight lending rate at 11.25%.  The previous last meeting to end without an interest rate change was on April 24th.  In August, the lending rate was cut by 75 basis points.  In July, the borrowing and 1-week repo rates were reduced by 50 bps.  In June, the 1-week repo rate dropped 75 bps, and such was also reduced by 50 bps in May.

A released statement pledges not to abandon tight monetary policy “by keeping a flat yield curve until there is a significant improvement in the inflation outlook.”  Government officials had been pressuring the central bank to keep cutting rates, but “elevated food prices continue to delay the improvement in the inflation outlook.”  Consumer prices increased 9.54% between August 2013 and August 2014, and the Turkish lira shares the vulnerability of other emerging markets especially given the government’s predisposition against taking any provocative actions against ISIS.  Meantime, Turkish growth has slowed considerably.

The next scheduled MPC policy announcement is on October 23.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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