By CentralBankNews.info
Turkey’s central bank cut its benchmark one-week repurchase rate by a further 25 basis points to 7.50 percent, as expected, saying monetary policy decisions in the coming period would depend on how fast the outlook for inflation improves.
The Central Bank of the Republic of Turkey (CBRT), which has been under heavy political pressure to quickly unwind a 550 basis points rate hike in January 2014, also repeated its recent guidance that it would continue to closely monitor inflationary expectations and maintain a flat yield curve until there is a significant improvement in the inflation outlook.
Last month the CBRT cut its benchmark rate by 50 basis points, continuing the gradual process of lowering the rate from the 10.0 percent that was imposed in January 2014 in response to a sharp fall in the lira currency as emerging markets were hit by a bout of currency volatility.
In addition to lowering the one-week repo rate, the CBRT today also cut its overnight marginal funding rate on repo transactions by 50 basis points to 10.75 percent, the borrowing rate for primary dealers to 10.25 percent from 10.75 percent and the central bank’s borrowing rate to 7.25 percent from 7.50 percent.
The borrowing rate in the late liquidity window was maintained at 0 percent while the lending rate was cut to 12.25 percent from 12.75 percent.
Turkey’s consumer price inflation rate eased to 7.24 percent in January from 8.17 percent in December and core inflation fell to 8.8 percent in December from 9.0 percent in November.
The CBRT said it expects the downward trend in core inflation to continue but added a cautious approach to monetary policy was required to reach a permanent decline in inflation.
The Turkish lira currency started depreciating in April 2013 when it was around 1.8 to the U.S. dollar and hit an all-time low of 2.51 on Feb. 11 this year following renewed calls by Turkey’s president, Recep Tayyip Erdogan, on the central bank to cut interest rates.
