Central Bank Does Not Change Interest Rate

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The Central Bank of the Republic of Turkey (TCMB) Monetary Policy Committee has kept the political interest rate, which is also called the one-week repo rate, fixed at its current level of 24 percent.

In its meeting dated September 13, 2018, Central Bank increased the one-week repo rate from 17.75 to 24 percent. The interest rate was expected to be 21.50 percent ahead of the meeting in September.

Taking part in the surveys ahead of today's meeting, the analysts expected that no interest rate hike would be implemented.

In the statement released after the meeting, the bank has explained the reasons for its interest rate decision as follows:

Economic balancing

"The recently announced data have been indicating that the tendency towards economic balancing has become evident.

"Though the foreign demand has been keeping its strength, the slowdown in the economic activities has been continuing as a result of the tightening in the financial conditions.

Impact of inflation rate

"The recent developments in the inflation rates have pointed to important risks in terms of price stability. It is noteworthy that price increases have been acquiring a more general character in such a way to encompass the items on the lower bases as well.

"Though it is expected that the weakening in the domestic demand conditions will partly limit the disruption in the inflation outlook, the upward risks in terms of pricing behaviors have still been prevalent."

Aim: "Tight monetary stance"

Central Bank has announced the reason for its interest rate decision as "tight monetary stance". In the statement, it has also been indicated,

"Until an evident improvement is achieved in inflation outlook, the tight stance in monetary policy will be steadfastly maintained."

The statement has also emphasized that an additional monetary tightening can be introduced if needs be. (HK/SD)