Central Bank of Turkey keeps policy rates unchanged

The Monetary Policy Committee of the Turkish Central Bank January 14 decided to keep policy rates unchanged at historic lows: overnight borrowing rate at 6.5% and lending rate at 9%. The Committee again emphasized that “lingering problems” in the global economy and “uncertainties” regarding the strength of Turkey’s economy require it to keep policy rates at low levels for a long period of time. The Committee also indicated its expectation that inflation would rise significantly in the next two months due to tax adjustments and base effects, but would soften again by 2Q2010.

A parallel announcement by TurkStat indicated that Turkish unemployment declined unexpectedly in November to 13 percent. This is unqualified good news for Turkey’s economic recovery. It may signal, however, an earlier turning point for tightening Turkey’s interest rates than the CBT has anticipated. 

Source: Central Bank of the Republic of Turkey, Decision of the Monetary Public Committee; January 14, 2010

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