FXStreet (Mumbai) – The central bank of Turkey (TCMB) kept key interest rates unchanged on Tuesday amid the volatile political situation in the country and persisting uncertainty.
The monetary policy committee of the Turkish central bank decided on Tuesday to keep its one-week repo rate at 7.50% and the overnight borrowing rate at 7.25%, unchanged from July. The overnight lending rate was also kept at 10.75%, while the primary dealers’ overnight borrowing rate remained at 10.25%.
The central bank noted in its statement, “Loan growth continues at reasonable levels 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,”
“External demand remains weak, while domestic demand contributes to growth moderately. The Committee assesses that the implementation of the announced structural reforms would contribute to the potential growth significantly.”
“Future monetary policy decisions will be conditional on the improvements in the inflation outlook. Inflation expectations, pricing behavior and other factors that affect inflation will be monitored closely and the cautious monetary policy stance will be maintained, by keeping a flat yield curve, until there is a significant improvement in the inflation outlook.”
On Monday, Economy Minister Nihat Zeybekci said, ‘Interest rates need to fall’, reviving the earlier attempts of the Turkish government to influence the central bank.
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