Central Bank of Turkey maintains existing short-term interest rates

By Tali David

Minneapolis, Aug. 16 - The Central Bank of Turkey's Monetary Policy Committee announced after its meeting on Thursday that it decided to keep its short-term interest rates at existing levels, including the one-week repo rate, which will remain at 5¾%.

According to a bank news release, the committee also chose to keep the overnight lending rate at 11½%. It was previously dropped from 12½% in February.

Additionally, the interest rate on borrowing facilities for primary dealers via repo transactions was kept at 11% after being lowered from 12% in February.

The overnight borrowing rate was once again kept at 5%.

Of the late liquidity window interest rates, the borrowing rate was maintained at 0% and the lending rate was unchanged at 14½%. The latter was cut from 15½% in February.

The committee said that recent data confirm that the rebalancing between the domestic and external demand continues as envisaged. Domestic demand displays a modest recovery, while exports continue to grow despite the weakening global outlook.

The bank added that overall, aggregate demand conditions support disinflation and current account balance continues to improve gradually.

The committee said it expects inflation to follow a downward course in the forthcoming period as indicated in the July inflation report. However, pricing behavior should be closely monitored as inflation will continue to stay above the target for some time.

The impact of the measures undertaken on credit, domestic demand and inflation expectations will be monitored closely, and the funding amount will be adjusted in either direction, as needed, the committee said.

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