Turkey Holds Key Interest Rate at 8%


The Central Bank of Turkey held its benchmark one-week repo rate at 8 percent on July 27th, as widely expected, saying current elevated levels of inflation pose risks on the pricing behavior while the economic activity is expected to maintain its strength boosted by both domestic and external demand.

Also, the central bank left its overnight lending rate unchanged at 9.25 percent; its overnight borrowing rate at 7.25 percent; and its late liquidity window rate at 12.25 percent.

Statement by the Central Bank of the Republic of Turkey:

Recently released data indicate an ongoing recovery in the economic activity. Domestic demand conditions have improved and demand from the European Union economies continues to contribute positively to exports. The economic activity is expected to maintain its strength due to the supportive measures and incentives provided recently. The Committee assesses that the implementation of the structural reforms would contribute to the potential growth significantly.

Although recent improvements in cost factors and expected partial correction in food prices will contribute to disinflation, current elevated levels of inflation pose risks on the pricing behavior. Accordingly, the Committee decided to maintain the tight stance of monetary policy.

The Central Bank will continue to use all available instruments in pursuit of the price stability objective. 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.

It should be emphasized that any new data or information may lead the Committee to revise its stance.

Central Bank of Turkey | Joana Ferreira | joana.ferreira@tradingeconomics.com
7/27/2017 11:07:19 AM