Bloomberg News

Turkey Central Bank Keeps Benchmark Rates Unchanged After Unrest

June 18, 2013

Turkey’s central bank kept its three main interest rates unchanged for the first time since August, citing a “healthy” recovery in domestic demand while exports remain hobbled by a global slowdown.

The bank in Ankara kept its benchmark one-week repo rate at 4.5 percent, according to an e-mailed statement. It also kept the overnight lending and borrowing rates, which mark the boundaries of its so-called interest-rate corridor, at 6.5 percent and 3.5 percent respectively. The decision matched the expectations of all economists surveyed by Bloomberg.

The central bank has been cutting rates this year to spur a slowing economy and prevent capital inflows from strengthening the lira. The bank made no reference in its statement today to the protests that have engulfed Istanbul and other cities in the past three weeks, leading business and tourism groups to warn of risks to the economy.

Capital inflows have weakened due to “uncertainty over interest rates at the global level,” and the bank will maintain “flexibility in its monetary policy in both directions” as required by international conditions, it said today. Credit growth in Turkey “remains above the reference level,” the bank said.

The lira and bonds pared losses after the central bank’s decision. The currency was down 0.2 percent at 1.878 per dollar as of 2:25 p.m. Yields on benchmark two-year debt were up 45 basis points to 6.69 percent.

To contact the reporters on this story: Selcuk Gokoluk in Istanbul at sgokoluk@bloomberg.net; Taylan Bilgic in Istanbul at tbilgic2@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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