According to the press release of 22 September, the Central Bank of the Republic of Turkey’s (CBRT) Monetary Policy Committee decided to keep the overnight funding rate at 10.75% and the borrowing rate at 7.25. The CBRT’s MPC also noted that “…Loan growth continues at reasonable levels in response to the tight monetary policy stance… …favorable developments in the terms of trade and the moderate course of consumer loans contribute to the improvement in the current account balance… … External demand remained weak… …while domestic demand contributed to growth… …The composition of growth is expected to shift gradually towards net exports in upcoming periods with the support of rising demand from the European Union economies…”
As far as the continuing outlook, the statement noted that, “…Considering the impact of the uncertainty in domestic and global markets on inflation expectations and taking into account the volatility in energy and food prices, the Committee decided to maintain the tight liquidity stance as long as deemed necessary… … Inflation expectations, pricing behavior and other factors that affect inflation will be monitored closely and the cautious monetary policy stance will be maintained…” The point of the matter is that the CBRT, under Governor Basci, is determined to keep its inflation containment policy utilizing high policy rates.
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