Turkey Central Bank Slashes Interest Rates Further
12 Dicembre 2019 - 7:39AM
RTTF2
The Turkish central bank again cut its key interest rate
sharply, citing a continued recovery in the economic activity and a
broad decline in inflation expectations. The Monetary Policy
Committee, led by TCMB Governor Murat Uysal, decided to reduce the
policy rate, which is the one-week repo auction rate, to 12.00
percent from 14.00 percent. Economists had forecast a cut to 12.50
percent.
The bank expects inflation to materialize close to the lower
bound of the October Inflation Report projections for the end of
the year. The risks around the disinflation path for 2020 remain
balanced, the TCMB added.
"Accordingly, considering all the factors affecting inflation
outlook, the Committee decided to reduce the policy rate by 200
basis points," the bank said.
"At this point, the current monetary policy stance is considered
to be consistent with the projected disinflation path."
In the previous session in late October, the bank had cut the
rate by 250 basis points. In July and September, the rate was
lowered by 425 and 325 basis points. "The Committee assesses that
maintaining a sustained disinflation process is the key for
achieving lower sovereign risk, lower long-term interest rates, and
stronger economic recovery," the bank said.
"Keeping the disinflation process in track with the targeted
path requires the continuation of a cautious monetary stance." The
extent of the monetary tightness will be determined by considering
the indicators of the underlying inflation trend to ensure the
continuation of the disinflation process, the central bank added.
Latest data showed that inflation accelerated to a three-month high
of 10.56 percent in November and the economy returned to growth in
the third quarter, expanding 0.9 percent year-on-year. The economy
grew for the first time in four quarters.
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