Press Release on Interest Rates – 14/12/2017, (2017-46)

No: 2017-46

14 December 2017

DECISION OF THE MONETARY POLICY COMMITTEE

 

Participating Committee Members

Murat Çetinkaya (Governor), Ömer Duman, Erkan Kilimci, Emrah Şener, Murat Uysal, Abdullah Yavaş.

The Monetary Policy Committee (the Committee) has decided to set the short term interest rates at the following levels:

a) Overnight Interest Rates: Marginal Funding Rate has been kept at 9.25 percent and borrowing rate has been kept at 7.25 percent,
b) One-week repo rate has been kept at 8 percent,
c) Late Liquidity Window Interest Rates (between 4:00 p.m. – 5:00 p.m.): Borrowing rate has been kept at 0 percent, while lending rate has been increased from 12.25 percent to 12.75 percent.

During year 2017, aggregate demand conditions have displayed a strong course and credit has shown rapid growth. Recently released data indicate that economic activity maintains its strength. Domestic demand conditions keep improving and external demand continues to contribute positively to exports.

Current elevated levels of inflation and recent developments in cost factors have increased the risks on expectations and the pricing behavior. Accordingly, the Committee decided to tighten the monetary policy stance.

The Central Bank will continue to use all available instruments in pursuit of the price stability objective. Tight stance in monetary policy will be maintained decisively until inflation outlook displays a significant improvement and becomes consistent with the targets. Inflation expectations, pricing behavior and other factors affecting inflation will be closely monitored and, if needed, further monetary tightening will be delivered.

It should be emphasized that any new data or information may lead the Committee to revise its stance.

The summary of the Monetary Policy Committee Meeting will be released within five working days.