Turkey holds repo rate at 7½%, will continue ‘cautious’ policy stance

By Wendy Van Sickle

Columbus, Ohio, Oct. 20 – The Central Bank of Turkey’s Monetary Policy Committee decided to maintain the one-week repo rate at 7½%.

The bank said on Thursday that recent data and indicators for the third quarter show a deceleration in economic activity and that “reduced tightness in monetary conditions and the recent macroprudential measures support the overall financial conditions.”

Demand from E.U. economies continues to support exports, and domestic demand is expected to begin to rally in the final quarter on recent supportive measures and incentives.

The slowdown in aggregate demand is contributing to a gradual fall in core inflation, the bank said.

However, recent developments in exchange rates and other cost factors stifle improvement in inflation outlook, calling for a continued cautious monetary policy stance, the bank continued.

“Taking into account inflation expectations, pricing behavior and the course of other factors affecting inflation, the cautious monetary policy stance will be maintained,” the bank said.

The marginal funding rate was kept at 8¼%, the borrowing rate was held at 7¼%, and the lending rate was kept at 9 ¾%.

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