Turkey's Central Bank Holds Steady Interest Rates
By Öznur Keleş
Turkey's Central Bank (CB) held interest rates steady for another month.
Following a meeting of its Monetary Policy Committee, the bank announced that its overnight lending rate will be 12%, its one-week repo rate will be 10% and its overnight borrowing rate will remain 8%.
The Central Bank stated that inflation expectations and pricing behavior will be closely monitored and tight monetary policy stance will be maintained until there is a marked improvement in inflation.
After the announcement of the CB, the value of the dollar began to decline against the Turkish lira. While it was over 2.1420 lira before, it declined to 2.1345 lira shortly after the decision. Experts explained that interest rates remaining constant provided the recovery effect in the interest rate.
It is crucial that the CB has not pulled down the interest rates, despite the fact that it has been under pressure from the government. The Turkish Prime Minister Recep Tayyip Erdogan has insisted an interest rate cut after his party's victory in the local elections, saying that high interest rates impede investment. Similarly, the Minister of Economy Nihat Zeybekçi also defends that CB should encourage the market by lowering interest rates.
On the other hand, the general director of Bosphorus Capital, Murat Salar, stated that the CB pressed the right button on the interest rates. According to Salar, this was a positive development in terms of the credibility of the CB for the coming period.
Interest rate policy is a policy that provides to affect the market interest rate, accordingly monetary transactions and economy
Interest rate policy a type of monetary policy that is used to determine the supply of money in the market. In that respect, it affects monetary transactions and economy. . It is the most effective instrument of monetary policy.
About the author: JTW
JTW - the Journal of Turkish Weekly - is a respected Turkish news source in English language on international politics. Established in 2004, JTW is published by Ankara-based Turkish think tank International Strategic Research Organization (USAK).
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