Turkey may cut its overnight lending rate
by Nevzat Devranoglu,
2016-03-18 13:43:35.0
ANKARA — Turkey’s central bank may cut its overnight lending rate next week, despite stubbornly high inflation and a volatile lira, an adviser to President Tayyip Erdogan said on Thursday.
Adviser Cemil Ertem said markets were expecting Turkey’s central bank to keep rates on hold at its meeting next week, but there was also the chance of a rate cut.
"Such an opportunity is there for Turkey. Overnight lending, which finances the banking system, may be the subject of a discount on the upper band interest rate," he said in a television interview.
The overnight lending rate, currently at 10.75%, is one of three main rates. Turkey actively controls the "corridor" between its lending and borrowing rates by tweaking the volumes of money available at these rates, such that a cut or a hike at one end of the corridor need not mean average borrowing costs change.
On February 23, the central bank kept its rates on hold for the 12th consecutive month, raising worry about its reluctance to tackle inflation which was 8.78% in February.
The bank’s next rate setting meeting is on March 24.
Reuters
Recep Tayyip Erdogan. Picture: REUTERS
ANKARA — Turkey’s central bank may cut its overnight lending rate next week, despite stubbornly high inflation and a volatile lira, an adviser to President Tayyip Erdogan said on Thursday.
Adviser Cemil Ertem said markets were expecting Turkey’s central bank to keep rates on hold at its meeting next week, but there was also the chance of a rate cut.
"Such an opportunity is there for Turkey. Overnight lending, which finances the banking system, may be the subject of a discount on the upper band interest rate," he said in a television interview.
The overnight lending rate, currently at 10.75%, is one of three main rates. Turkey actively controls the "corridor" between its lending and borrowing rates by tweaking the volumes of money available at these rates, such that a cut or a hike at one end of the corridor need not mean average borrowing costs change.
On February 23, the central bank kept its rates on hold for the 12th consecutive month, raising worry about its reluctance to tackle inflation which was 8.78% in February.
The bank’s next rate setting meeting is on March 24.
Reuters
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