Central Bank of Turkey Holds Repo Rate at 5.75%

The Central Bank of the Republic of Turkey kept its benchmark 1-week repo rate unchanged at 5.75%.  The Bank said: "The Committee has indicated that tight monetary policy should be maintained for a while in order to keep inflation outlook consistent with the medium term targets. However, given the prevailing uncertainties regarding global economy, it would be appropriate to preserve the flexibility of monetary policy. Therefore, the impact of the measures undertaken on credit, domestic demand, and inflation expectations will be monitored closely and the amount of Turkish lira funding via one-week repo auctions will be timely adjusted on either direction, if needed."

The Turkish central bank last cut the benchmark rate by 50 basis points when it held an emergency meeting in early August, the bank also cut its benchmark interest rate by 25 basis points to 6.25% in January this year.  The Turkish central bank also adjusted required reserves in late July.  Turkey reported annual consumer price inflation of 7.7% in October, compared to 6.7% in August, 6.3% in July, 6.2% in June, 7.2% in May, 4.26% in April, and 3.99% in March, and above the Bank's full year inflation target of 5.5%.  

Turkey's economy grew 1.7% in Q3 (1.2% in Q2), placing the Turkish economy up 8.2% on an annual basis (8.8% in Q2).  The Turkish Lira (TRY) has weakened by about 21 percent against the USD so far this year, and last traded around 1.89 against the US dollar.

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