Turkey’s central bank maintained its policy rates but said “additional monetary tightening was necessary” to ensure that inflation remains in line with the bank’s 5 percent target and the bank would raise its target for interbank money market rates to 9.0 percent from 7.75 percent.
The Central Bank of the Republic of Turkey (CBRT) has been tightening its policy since May when global investors started to shift away from emerging markets and has come under renewed pressure to raise rates further to shore up the lira currency as investors have become unnerved by a government corruption scandal ahead of this year’s elections.
Further pressure on the central bank to tighten followed after data showed that Turkey’s current account deficit widened in November while inflation rose in December.
The CBRT said data from the last quarter of the year showed moderate growth in domestic demand and exports and the current account, excluding gold trading, was expected to continue to improve in 2014.
The Central Bank of the Republic of Turkey (CBRT) has been tightening its policy since May when global investors started to shift away from emerging markets and has come under renewed pressure to raise rates further to shore up the lira currency as investors have become unnerved by a government corruption scandal ahead of this year’s elections.
Further pressure on the central bank to tighten followed after data showed that Turkey’s current account deficit widened in November while inflation rose in December.
The CBRT said data from the last quarter of the year showed moderate growth in domestic demand and exports and the current account, excluding gold trading, was expected to continue to improve in 2014.
