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Turkey holds one-week repo rate at 8% as economic activity recovers
By Tali Rackner
Minneapolis, April 26 – The Central Bank of Turkey’s Monetary Policy Committee decided to maintain the one-week repo rate at 8%, according to a bank notice.
The marginal funding rate for overnight interest rates was kept at 9¼% with the borrowing rate at 7¼%. The borrowing rate for the late liquidity window interest rate was maintained at 0%, while the lending rate was increased to 12¼% from 11¾%.
The committee said recent data point toward a gradual recovery in the economic activity.
Domestic demand show a moderate improvement and demand from European Union economies continues to contribute positively to exports.
With recent supportive measures and incentives, the committee expects economic activity to gain further pace in the upcoming period.
The committee said that the implementation of the structural reforms would drastically contribute to the potential growth.
Meanwhile, cost pressures and volatility in food prices in recent months have led to a sharp increase in inflation, and despite the recent improvement in the risk appetite contains some of the upside pressures from cost factors, the existing high levels of inflation pose risks on the pricing behavior.
Accordingly, the committee said it decided to strengthen the monetary tightening in order to contain the deterioration in the inflation outlook.
“The central bank will continue to use all available instruments in pursuit of the price stability objective,” the release said.
“Tight stance in monetary policy will be maintained until inflation outlook displays a significant improvement. Inflation expectations, pricing behavior and other factors affecting inflation will be closely monitored and, if needed, further monetary tightening will be delivered.”
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