Turkey's cen­tral bank leaves key rates un­changed

The Pak Banker - - FRONT PAGE -

Turkey's cen­tral bank kept its three main in­ter­est rates un­changed on Tues­day and said pol­icy mak­ers would keep liq­uid­ity tight, with food prices and tax in­creases fu­el­ing above-tar­get in­fla­tion. The bank kept its main one-week repo rate at 7.50 per­cent, match­ing the me­dian es­ti­mate in a sur­vey of 19 econ­o­mists. It also kept its overnight lend­ing and bor­row­ing rates at 10.75 per­cent and 7.25 per­cent re­spec­tively, ac­cord­ing to a state­ment posted on the bank's web­site.

The bank again made no ref­er­ence to Gov­er­nor Er­dem Basci's plan to aban­don Turkey's triple-rate frame­work and move to a sin­gle-rate mon­e­tary pol­icy, fo­cus­ing in­stead on the out­look for in­fla­tion. With price in­creases run­ning at al­most dou­ble the bank's 5 per­cent tar­get and his man­date ex­pir­ing on April 19, Basci prob­a­bly wants to leave key de­ci­sions to his suc­ces­sor, said Ipek Ozkardeskaya, a mar­kets an­a­lyst at Lon­don Cap­i­tal Group Ltd.

"The make up of the bank's mon­e­tary pol­icy com­mit­tee led by Basci is go­ing to change this year which makes it more ap­pro­pri­ate for the new team to come up with new plan," Ozkardeskaya, who ac­cu­rately pre­dicted the bank's de­ci­sion to hold rates, said by e-mail on Mon­day. "If sim­pli­fi­ca­tion hap­pens, it should be done by the new team for sake of con­ti­nu­ity." Basci said last year he planned to sim­plify mon­e­tary pol­icy once the U.S. Fed­eral Re­serve be­gan rais­ing in­ter­est rates. Af­ter that hap­pened in De­cem­ber, Basci said he would wait to see if lower volatil­ity in debt mar­kets per­sisted, and then made no ref­er­ence to the plan in last month's rates de­ci­sion.

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