Bloomberg News

Turkish Central Bank Says Using Markets for Extra Tightening

January 02, 2012

Jan. 2 (Bloomberg) -- Turkey’s central bank said it began additional monetary tightening through market instruments on Dec. 29 to prevent a deterioration in inflation expectations.

The bank reduced funding to banks at the benchmark interest rate for a “temporary period,” it said in an e-mailed statement from Ankara today. It may also use foreign exchange sales to support the tightening and may cut benchmark funding even on days it classes as “normal,” it said.

It’s essential that the additional tightening be “strong, effective and temporary,” it said. The duration depends on the speed of the correction in factors that impact on the inflation outlook, it said. Inflation in December may accelerate to a “little above” 10 percent, it said.

To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net

To contact the editor responsible for this story: Steve Bryant at sbryant5@bloomberg.net


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