Friday, October 21, 2011

Turkey Central Bank Holds Repo Rate at 5.75%

Central Bank News - Turkey Monetary Policy Rate
The Central Bank of the Republic of Turkey held its benchmark 1-week repo rate at 5.75%.  The Bank said: "Recent data releases suggest that there will be a notable reduction in economic growth in the second half of the year. External demand remains weak, and domestic demand continues to slow down. The deceleration in  credit growth and domestic demand combined with the exchange rate movements have been contributing to the rebalancing of domestic and external demand. Accordingly, the Committee expects a significant improvement in the current account balance in the forthcoming period."

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 Bank also increased the overnight lending rate by 350 basis points to 12.50% from 9.00%.  The Turkish Lira (TRY) has weakened by about 20 percent against the USD so far this year, and last traded around 1.86 against the US dollar. Turkey's central bank is scheduled to review monetary policy settings on the 23rd of November.


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