Wednesday, September 21, 2011

Central Bank of Turkey Holds Rate at 5.75%

The Central Bank of the Republic of Turkey held its benchmark 1-week repo rate at 5.75%.  The Bank also held the overnight borrowing rate at 5.00% and kept the lending rate unchanged at 9.00%.  The Bank said: "The Committee has noted that core inflation may continue to rise in the short-term. However, due to the slowdown in economic activity, it is expected that the second round effects of exchange rate movements would be limited, and thus the increase in inflation would be temporary. Accordingly, the Committee has indicated that inflation outlook for the end of 2012 is consistent with the 5 percent target."

The Turkish central bank cut the benchmark rate by 50 basis points when it held an emergency meeting in early August, the bank also cut its benchmark interest rate by 25 basis points to 6.25% in January this year.  The Turkish central bank also adjusted required reserves in late July.  Turkey reported annual consumer price inflation of 6.7% in August, compared to 6.3% in July, 6.2% in June, off from 7.2% in May, but up from 4.26% in April, and 3.99% in March, and above the Bank's full year inflation target of 5.5%.  The Turkish Lira (TRY) has weakened by about 16.5 percent against the USD, and last traded around 1.795 against the US dollar.


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