The Central Bank of the Republic of Turkey (CBRT), which cut its key rate by 75 basis points in 2015, also said that its policy was conditional on the outlook for inflation and that the monetary policy committee had "assessed the heightened global volatility since the beginning of the year and the January Inflation Report forecasts."
The January inflation report is scheduled to be released on Jan. 26.
There was no immediate reference to any change in the central bank's interest rate structure.
The central bank's governor, Erdem Basci, has said the central bank would simplify its interest rate corridor system rate and lower the distance between the upper and lower rates in connection with a normalization of global monetary policy, a reference to the U.S. Federal Reserve's move to tighten policy in December after seven years of essentially zero rates.
Currently, the CBRT's overnight rates comprise a marginal funding rate of 10.75 percent and a borrowing rate at 7.25 percent, with the benchmark one-week repo rate at 7.50 percent.
Turkey's inflation rose to a 2015-high of 8.81 percent in December from November's 8.1 percent, with the depreciation of the lira's exchange rate contributing to the rise.
It is the fifth year that the central bank has been unable to meet its target rate, which was 5 percent for 2015 and 2014.
For the 2016-17 period, the target is also 5.0 percent, with an uncertainty band of 2 percentage points in both directions.
In its latest inflation report from October, the CBRT forecast inflation of between 5.0 percent and 8.0 percent by the end of 2016 with a midpoint of 6.5 percent, with inflation the nearing 5 percent by the end of 2017.
The lira has been falling since the "taper tantrum" of May 2013 and fell 20 percent against the U.S. dollar in 2015. Today the lira was trading at 3.04 to the dollar today, down almost 4 percent since the beginning of the year.
In its statement, the central bank said energy prices were having a favorable effect on inflation, while "other cost factors" limit the improvement in core inflation.
But considering wage developments, uncertainly in global markets on inflation and prices, and taking account of the volatility of energy and unprocessed food prices, the central bank said it would maintain its tight liquidity stance as long as deemed necessary."
The central bank added that demand from European Union countries continues to support the country's exports despite "elevated geopolitical risks in other export markets,"
Turkey's economy expanded by an annual 4.0 percent in the third quarter, up from 3.8 percent in the second quarter.
The Central Bank of the Republic of Turkey issued the following statement:
"Participating Committee Members
Erdem Başçı (Governor), Ahmet Faruk Aysan, Murat Çetinkaya, Turalay Kenç, Necati Şahin, Abdullah Yavaş, Mehmet Yörükoğlu.
Erdem Başçı (Governor), Ahmet Faruk Aysan, Murat Çetinkaya, Turalay Kenç, Necati Şahin, Abdullah Yavaş, Mehmet Yörükoğlu.
The Monetary Policy Committee (the Committee) has decided to keep the short term interest rates constant at the following levels:
a) Overnight Interest Rates: Marginal Funding Rate at 10.75 percent, and borrowing rate at 7.25 percent,
b) One-week repo rate at 7.5 percent,
c) Late Liquidity Window Interest Rates (between 4:00 p.m. – 5:00 p.m.): Borrowing rate at 0 percent, and lending rate at 12.25 percent.
a) Overnight Interest Rates: Marginal Funding Rate at 10.75 percent, and borrowing rate at 7.25 percent,
b) One-week repo rate at 7.5 percent,
c) Late Liquidity Window Interest Rates (between 4:00 p.m. – 5:00 p.m.): Borrowing rate at 0 percent, and lending rate at 12.25 percent.
Annual loan growth continues at reasonable rates in response to the tight monetary policy stance and macroprudential measures. The favorable developments in the terms of trade and the moderate course of consumer loans contribute to the improvement in the current account balance. Demand from the European Union economies continues to support exports, despite elevated geopolitical risks in other export markets. The Committee assesses that the implementation of the announced structural reforms would contribute to the potential growth significantly.
Energy price developments affect inflation favorably, while other cost factors limit the improvement in the core indicators. Considering the wage developments and the impact of the uncertainty in global markets on inflation expectations and pricing behavior and taking into account the volatility in energy and unprocessed food prices, the Committee stated that the tight liquidity stance will be maintained as long as deemed necessary.
Future monetary policy decisions will be conditional on the inflation outlook. Taking into account inflation expectations, pricing behavior and the course of other factors affecting inflation, the tight monetary policy stance will be maintained. The Committee also assessed the heightened global volatility since the beginning of the year and the January Inflation Report forecasts.
It should be emphasized that any new data or information may lead the Committee to revise its stance.
The summary of the Monetary Policy Committee Meeting will be released within five working days."
0 comments:
Post a Comment