Turkey Benchmark Interest Rate Unchanged; Overnight Rates Cut

The Monetary Policy Committee has decided to adjust the short term interest rates as follows: One-week repo rate (the policy rate) has been kept at 5.5 percent. Overnight Borrowing rate has been cut from 4.75 percent to 4.50 percent while lending rate has been cut from 8.75 percent to 8.50 percent.

The Committee also decided to adjust the Interest rate on borrowing facilities provided for primary dealers via repo transactions; cut from 8.25 percent to 8 percent. The Late Liquidity Window Interest Rates (between 4:00 p.m. – 5:00 p.m.): Borrowing rate has been kept at 0 percent while lending rate has been cut from 11.75 percent to 11.50 percent.

Excerpt from the statement by the Committee:
Recent data confirm that the rebalancing between the domestic and external demand continues as envisaged. Domestic demand follows a moderate pace while exports continue to increase despite weak global activity. Overall, current account deficit continues to decline gradually.
Ongoing uncertainties regarding the global economy necessitate the monetary policy to remain flexible in both directions. Therefore, 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 has indicated that  inflation will continue to fall despite the recent increase in oil prices. Core inflation indicators are also expected to follow a mild course. In the meantime, the impact of increases in administered prices on the pricing behavior will be monitored closely. It should be emphasized that any new data or information may lead the Committee to revise its stance.

TCMB | Nuno Fontes | nuno@tradingeconomics.com
2/19/2013 12:37:42 PM