The central bank also kept the overnight borrowing rate at 7.25 percent; the overnight lending rate at 10.75 percent; and the primary dealers'overnight borrowing rate at 10.25 percent.
Earlier on June 8th, the Bank took an additional measures to defend the currency by reducing the forex repo lending rate by 50 bps to 3.5 percent for USD and 1.5 percent for EUR.
Statement by the Central Bank of the Republic of Turkey:
Loan growth continues at reasonable levels in response to the tight monetary policy stance and macroprudential measures. The favorable developments in the terms of trade and the moderate course of consumer loans contribute to the improvement in the current account balance. External demand remains weak, while domestic demand contributes to growth moderately. The Committee assesses that the implementation of the announced structural reforms would contribute to the potential growth significantly.
Inflation is expected to decline in the short term owing to a partial correction in food prices. Yet, recent movements in the exchange rates have delayed the improvement in the core indicators. This, combined with the uncertainty in global markets and volatility in energy and food prices, makes it necessary to maintain the cautious stance in monetary policy. The Committee has therefore decided to keep the interest rates at current levels.
Future monetary policy decisions will be conditional on the improvements in the inflation outlook. Inflation expectations, pricing behavior and other factors that affect inflation will be monitored closely and the cautious monetary policy stance will be maintained, by keeping a flat yield curve, until there is a significant improvement in the inflation outlook.