Congratulations, CBT!

TURKEY - In Brief 28 Jan 2014 by Murat Ucer
Today's rate decisions are much bolder and in a more simplifying direction -- in terms of monetary policy/interest rate framework -- than we expected. The O/N lending rate is now 12%, up from 7.75%; borrowing rate is now 8% (up from 3.5%) and late O/N liquidity lending rate is now 15%, up from 10.25%. More importantly, one-week repo rate, the former policy rate that we had long forgotten (at 4.5%), is now 10%, and the Bank says it will do most of the funding at this rate instead of the marginal funding rate (12% now), effectively reinstating it as the policy rate again. So we seem to be talking a funding range between a low of 10% and high of 12%, which should be rather adequate for now to satisfy the market. The lira has so far reacted very positively, too, and we are not surprised.

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