Bloomberg News

Turkey Central Bank Says Liquidity Policy Better Than Rate Hikes

October 26, 2011

Oct. 26 (Bloomberg) -- Turkish central bank deputy governor Turalay Kenc said widening the corridor between the benchmark one-week repo lending rate and overnight lending rates will be more effective than raising the benchmark.

The policy of “liquidity” is designed to eliminate the second-round effects on inflation caused by a 30 percent depreciation in the lira, Kenc said in an interview today. Half of the depreciation has passed through to inflation, he said.

“Through liquidity provision we will try to influence the market interest rate,” Kenc said. “We think it’s going to be more effective rather than changing our policy rate.

To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net

To contact the editor responsible for this story: Mark Bentley at mbentley3@bloomberg.net


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