Turkey holds policy rate at 4½%, overnight interest rates constant

By Marisa Wong

Madison, Wis., Sept. 17 - The Central Bank of Turkey's Monetary Policy Committee said it maintained the one-week repo rate, or the policy rate, at 4½% at its meeting held Tuesday.

The committee also decided to keep overnight interest rates and late liquidity window interest rates constant. The overnight borrowing rate, lending rate and repo rate are 3½%, 7¾% and 6¾%, respectively. The late liquidity window borrowing and lending rates are 0% and 10¼%, respectively.

Recent data show domestic demand and exports are still growing at a moderate pace. The current policy framework is improving the current account balance, the committee said.

Meanwhile, inflation is expected to start falling in the coming period, but the core inflation indicators are likely to stay above the inflation target for some time due to the exchange rate volatility observed in recent months, the bank said.

The committee reiterated that it will keep a cautious monetary policy stance until the inflation outlook is in line with medium-term targets.

The bank noted that its Turkish lira liquidity policy needs to be more predictable in order to have price stability and financial stability in the domestic economy.

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