MPC: No action, somewhat more hawkish

TURKEY - Report 18 Jan 2018 by Murat Ucer

​In line with the consensus, the CBRT’s Monetary Policy Committee (MPC) did not change any of the short-term interest rates at today’s meeting, keeping the Late Liquidity Window lending rate at 12.75%, one-week repo rate at 8.0%, and the O/N lending and borrowing rates at 9.25% and 7.25%, respectively (see chart).

In terms of the content of the statement, the description of the economic cycle was broadly unchanged from the previous statement (still strong), but it differs in terms of: 1) the dropping of cost-push factors (read: exchange rate) from the previous statement (when talking about the risks on the pricing behavior), and 2) more importantly, the addition of a somewhat hawkish twist to the section on the policy outlook –that “[t]ight stance in monetary policy will be maintained decisively until inflation outlook displays a significant improvement, independent of base effects and temporary factors…” (emphasis is ours).

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