Turkey Benchmark Interest Rate Unchanged; Overnight and Late Window Lending 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 5.50 percent. Overnight Borrowing rate was also unchanged at 4.50 percent while lending rate has been cut from 8.50 percent to 7.50 percent.

The Committee also decided to adjust the Interest rate on borrowing facilities provided for primary dealers via repo transactions; cut from 8 percent to 7 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 11.50 percent to 10.50 percent.

Excerpt from the statement by the Committee:
Recent data suggest that domestic and external demand are evolving in line with expectations. Domestic demand follows a healthy recovery while exports remain relatively strong despite weak global economic activity. The current account deficit is expected to increase somewhat in the forthcoming period following the revival in domestic demand.However, the current policy framework is expected contain the widening in the current account deficit.
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 weak global demand and the commodity price outlook contains the upward pressures on inflation. In the meantime, the impact of increases in credit and domestic demand 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
3/26/2013 2:30:56 PM