Central Bank of the Republic of Turkey Fails to Loosen Policy Stance

July 27, 2017

The central bank lending rate has been at 9.25% since hikes of 25 basis points in November 2016 and 75 bps in January of this year. A statement released after the latest policy review observes improved domestic demand and inflation but cautions that “although recent improvements in cost factors and expected partial correction in food prices will contribute to disinflation, current elevated levels of inflation pose risks on the pricing behavior.¬†Tight stance in monetary policy will be maintained until inflation outlook displays a significant improvement.” Turkey’s one-week repo rate has been at 8.0% since a 50-basis point hike in November 2016, and the overnight deposit rate of 7.25% was last changed in February 2015 when such was cut from 7.50%.

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