Turkish interest rates: lower or higher?
Turkey’s central bank cut interest rates by more than expected on Tuesday – a move that highlighted pressures from both far afield and closer to home.
In some ways, the further-flung-factor was the more straightfoward one: the inflationary stance of Japan’s new prime minister is having a significant impact on Turkish monetary policy. What is more controversial is the role of Turkey’s own premier. Continue reading »
Turkey: interest rate cut is another dose of ‘flexible’ policy
Turkey’s central bank cut its overnight lending rate by 1 percentage point on Tuesday to 7.5 per cent but kept its overnight borrowing rate and its repurchasing rate – its main policy rate – on hold at 4.5 per cent and 5.5 per cent, respectively.
It is a typical example of what the bank calls its ‘flexible’ monetary policy, designed to adapt to uncertainties in the global economy. Analysts mostly call it ‘confusing’. Continue reading »
Turkey: the central bank and conflicting signals
Turkey’s central bank specialises in Solomonic decisions. Like the Biblical Jewish king, the bank’s approach to thorny monetary and financial questions is to give a bit to both sides in a dispute. The question, is, however, whether it cuts in equal halves. Continue reading »
Turkey cuts policy interest rate as economy slows
Turkey’s central bank has cut its policy interest rate by 25 basis points, from 5.75 per cent a year to 5.5 per cent. It suggests the bank is confident that inflation is under control and is more worried about slowing growth at home and abroad, and was widely expected by economists.
But as is often the case in Turkey, the CBRT’s signals are mixed. Given that the bank is trying to pull off a very tricky balancing act, they could hardly be any other way. Continue reading »
Turkey’s interest rate balancing act
A cautious move, or a nervous one? Turkey’s central bank cut its overnight lending rate from 9.5 per cent a year to 9 per cent on Tuesday while keeping its policy rate (the one-week repo) and its overnight borrowing rate unchanged at 5.75 per cent and 5 per cent, respectively.
As Capital Economics noted, in recent months the bank has provided liquidity exclusively at the policy rate, so Tuesday’s cut is a signal rather than a practical move. But what does it tell us? Continue reading »
Turkey cuts overnight rates by 150bp
Turkey’s central bank on Tuesday cut its overnight lending rate to 10 per cent from 11.5 per cent in an effort to boost slowing growth.
The one-week repo rate has been kept at 5.75 per cent, and the overnight borrowing rate at 5 per cent. The cut is the first since February. The monetary policy board in a statement cited both the weakening global growth outlook and slowing inflation as factors in its decision.
More to follow.
Turkey’s interest rates conundrum
Inflation has hit a three year high in Turkey, and most analysts agree: after a long period of confusion over the country’s unorthodox monetary policy, the interest rates that matter are set to stay high, for the short term at least.
The country has a notoriously arcane monetary policy, in which there is not one key interest rate but instead an “interest rate corridor” – a potpourri of weekly and overnight rates – which the central bank uses to shift the effective rate on an almost daily basis. Continue reading »
Turkey: easing but for how long?
It may not be much of a coincidence that a big emerging market – Turkey- relaxed its monetary policy almost as soon as the eurozone agreed the latest Greek bailout.
Turkey’s step, taken at the monthly meeting of the country’s monetary policy committee, reduces the highest interest rate the central bank can charge commercial banks by 100 basis points. Continue reading »
Turkey: “unstoppable” for long?
Whatever criticisms you can make of what one analyst labels Turkey’s “unstoppable” economy, there’s one thing the country’s economic boom is thankfully free of. It’s not an American style jobless recovery.
Quite the contrary. In the last year Turkey has created some 1.8m new jobs. Figures released on Thursday showed unemployment fell to 8.8 per cent to September, the lowest level since 2005 and down from a 2009 peak of more than 16 per cent.. On a seasonally adjusted basis, unemployment fell to 9.2 per cent, also the lowest level of recent times. But analysts are almost universal in predicting that things won’t stay quite this sweet for long. Continue reading »
Turkish rates: no direction home
Even before George Papandreou announced a referendum on Greece’s debt deal, Turkey’s central bank told the FT that the eurozone’s travails had made a shift of tack necessary in Ankara.
“All of these measures taken so far should be seen as a preparation for the eurozone debt problems,” said Bank Governor Erdem Basci in an email last week, referring to a set of announcements pushing up the cost of borrowing. “Now we are ready and waiting.” Continue reading »
IMF to Turkey: lift rates, cut inflation
Turkey’s central bank needs to pay more attention to inflation and to restore its credibility through interest rate rises, the International Monetary Fund has said.
The criticism comes at a time when the country’s currency is also under strain amid fears that global economic turbulence will expose the vulnerabilities of Ankara’s domestic demand-driven economic boom. Continue reading »
Turkey: steady for now, but questions remain
The turmoil on both sides of the Atlantic has shaken Turkey, where the Istanbul stock exchange steadied on Tuesday, a day after recording a 7 per cent slump – the biggest drop in almost three years.
After initial heavy falls during early trading, Istanbul’s benchmark index finished up 1.3 per cent on the previous day’s close.
Still, analysts say that, beyond the worldwide flight to quality, fears about Turkey’s current account deficit and confusion over its central bank policy have eaten into confidence. Monday’s fall was the biggest in percentage terms since October 2008. Continue reading »
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