Central Bank Keeps The Polıcy Rate Unchanged

Central Bank of Turkey's Monetary Policy Committee (the Committee) has decided to keep the policy rate unchanged at 8.25 percent, as expected.

The Committee also kept short term rates unchanged, marginal funding rate at 11.25 percent, the interest rate on borrowing facilities provided for primary dealers via repo transactions at 10.75 percent, and borrowing rate at 7.5 percent, said in the statement released by the Central Bank on Wednesday.

The Committee did not mention the "elevated" food prices as the main reason of the high inflation for the first time after five months, which had been repeated in the previous statemenets as "However, elevated food prices continue to delay the improvement in the inflation outlook."

Loan growth continued at reasonable levels in response to the tight monetary policy stance and macroprudential measures, the Committee stated in the statement, adding that, "The favorable developments in the terms of trade and the moderate course of consumer loans will contribute to the improvement in the current account balance."

"The Committee assessed that the implementation of the announced structural reforms would contribute to the potential growth significantly" said in the statement.

Declining commodity prices, in particular oil prices, would contribute to disinflation, the Committee said, and continued as follows:

"Under the current monetary policy stance, the Committee anticipates that, inflation will decline in line with the forecast presented in the Inflation Report throughout 2015, at a faster pace in the first half of the year. Inflation expectations, pricing behavior and other factors that affect inflation will be closely monitored and the tight monetary policy stance will be maintained, by keeping a flat yield curve, until there is a significant improvement in the inflation outlook." - Istanbul