Turkish Central Bank Holds Interest Rate at 6.25%

The Monetary Policy Committee of the Central Bank of the Republic of Turkey maintained its benchmark 1-week repo rate unchanged at 6.25%.  The Bank also held the overnight borrowing and lending rates unchanged at 1.50% and 9.00% respectively.  The Bank said: "that it would be appropriate to narrow the interest corridor gradually should the sovereign debt problems regarding some European economies and the concerns on global growth continue to have adverse impact on the risk appetite.  The Committee has also stated that all policy instruments may be eased should global economic problems intensify and lead to a contraction in domestic economic activity."

The Turkish central bank also held its benchmark interest rate unchanged during its June meeting this year.  Turkey reported annual consumer price inflation of 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%.  On inflation the Bank said: "Although core inflation is likely display some upward movement over the short term, the increase is expected to be limited due to the slowdown in economic activity".

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