Central Bank keeps key interest rate unchanged at 5.75 pct after meeting

The Central Bank of Turkey kept its key interest rate unchanged at 5.75 percent on Thursday, which came as no surprise to market observers.

CB Governor Erdem Başçı

CB Governor Erdem Başçı

The central bank’s Monetary Policy Committee (PPK) decided after a meeting on Thursday to keep the policy interest rate at 5.75 percent. The PPK decision was in line with expectations of the market, economists and investors. The central bank had reduced the key policy rate by a total of 75 basis points in December and January. Forecasting deterioration in the global economic outlook, the central bank on Aug. 4 slashed its one-week repo rate, or policy rate, by 50 basis points to 5.75 percent from the previous 6.25 percent to curb short-term money inflows. The rate had declined to 6.5 percent from 7 percent in December 2010 and later to 6.25 percent in January of this year. The PPK has increased the overnight lending rate by 3.5 basis points to 12.5 percent from the previous 9 percent, while the interest rate on borrowing facilities provided for primary dealers via repo transactions was increased to 12 percent from 8 percent. This move was aimed at stopping a devaluation of the Turkish Lira against foreign currency. Meanwhile, the central bank also said on Thursday that their efforts to curb an increase in consumer loans and increase savings in the domestic market have succeeded. The bank highlighted that they expected an increase in inflation in the months to come.

 

 

20 October 2011, Thursday / TODAY’S ZAMAN, İSTANBUL