Turkish central bank keeps interest rates steady amid political uncertainty

By bne IntelliNews August 18, 2015

The central bank of Turkey decided to keep its main rates unchanged at their current levels despite the sharp depreciation of TRY due to political uncertainty and security concerns.

Accordingly, the benchmark rate (one-week repo) was kept at 7.5%, while the ON borrowing and ON lending rates were maintained at 7.25%, and 10.75, respectively.

Most of the economists surveyed by Reuters and CNBC-e had not expected any rate move by the central bank. Following the central bank’s rate decision, TRY weakened further against the dollar.

Processed food and energy price developments affect inflation favourably in the short run, while exchange rate movements delay the improvement in the core indicators, said the bank in a statement released after the monetary policy committee meeting. Considering this delay and taking into account the uncertainty in domestic and global markets and the volatility in energy and food prices, the Committee decided to implement a tighter liquidity policy as long as deemed necessary, added the statement.

“Future monetary policy decisions will be conditional on the improvements in the inflation outlook. Inflation expectations, pricing behaviour 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,” reiterated the bank.

The committee also discussed the roadmap to be implemented before and after global monetary policy normalization and decided to publish a strategy document on the bank’s website, said the bank.

Policy Rate (%)
Date one-week repo
May-2010 7.00
Dec-2010 6.50
Jan-2011 6.25
Aug-2011 5.75
Dec-2012 5.50
Apr-2013 5.00
May-2013 4.50
Jan-2014 10.00
May-2014 9.50
Jun-14 8.75
Jul-14 8.25
Jan-15 7.75
Feb-15 7.50
Source: Central Bank

Related Articles

Four Turkish companies reportedly consider IPOs in London or Istanbul

Turkey’s Enerjisa, Memorial Health Group, Tab Gida and Baskent Gaz are considering public offerings in London or Istanbul, unnamed sources told Bloomberg on July 19. Enerjisa, a 50:50 JV ... more

Turkey bars entry to thousands from more than 140 nations over suspected IS ties

Turkey has arrested and deported thousands of people suspected of having links to the Islamic State group according to a Turkish interior ministry report entitled “Turkey’s Fight ... more

Evolution Equity Partners closes $125mn cybersecurity-focused fund

Evolution Equity Partners announced on 17 July the final closing of a new fund with total capital commitments of $125mn to make investments in cybersecurity and next generation enterprise software ... more

Dismiss