By Central Bank News
(Following story was originally published on Sept. 18, 2012 and is being repeated as it disappeared from the website after publication)
The Central Bank of the Republic of Turkey held its benchmark one-week repurchase rate steady at 5.75 percent but cut the ceiling on its interest rate corridor by 150 basis points to 10 percent from 11.5 percent, a move the central bank had signaled last month.
The central bank, which last month said that it may narrow the interest corridor “in the forthcoming period,” maintained the lower limit on the corridor at 5.0 percent.
The bank said today that it may take further “measured steps in the coming period.”
The bank introduced the interest rate corridor last year to help ward of speculative attacks and control inflation. Interest rates vary daily within the corridor.
The bank said it was taking a cautious stance as inflation remains above the bank’s 5.0 percent target. The inflation rate eased to 8.9 percent in August from July’s 9.1 percent.
The central bank said risk perceptions in financial markets had improved yet there was still uncertainties about the global economy. But domestic and foreign demand remain stable and exports continue their upward trend, despite the weaker global outlook.
Turkey’s economy expanded by an annual 2.9 percent in the second quarter, down from 3.3 percent in the first.
Last year Turkey’s Gross Domestic Product grew by 8.5 percent and the government is aiming for growth of 4 percent this year and has urged the central bank to cut rates to achieve this target.
