Arab Today, arab today turkey’s cb keeps interest rates on hold
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Arab Today, arab today
Arab Today, arab today

Turkey’s CB keeps interest rates on hold

Arab Today, arab today

Arab Today, arab today Turkey’s CB keeps interest rates on hold

Istanbul - Arabstoday

Turkey’s central bank (CB) has kept its key interest rates on hold on Thursday, opting instead to continue using liquidity management tools to curb inflation and support the lira currency. The bank said it would raise the amount of lira reserves that banks can keep in foreign currency to 50 per cent from 45 per cent, a move analysts said was aimed at supporting the lira, which lost 20 per cent of its value against the dollar last year. It was the second month running that the bank raised the amount of lira reserves that can be held in forex. “Given the continuing uncertainties regarding the global economy, the committee deemed it appropriate to retain flexibility in monetary policy,” the bank said in a statement. It also said it was increasing the limit on lira reserves that can be held in gold to 25 per cent from 20 per cent. It said it may implement additional monetary tightening on days when necessary and lira funding would be adjusted up or down as necessary, depending on the impact of policy on loans, domestic demand and inflation. The lira strengthened slightly after the central bank announcement, trading at 1.7927 against the dollar, from 1.7986 beforehand.   Monetary policy has been directed at trying to balance preserving growth while supporting the lira to curb high imported inflation which contributed to a current account deficit equivalent to 10 per cent of GDP last year. Moody’s promoted Turkey to one level below investment grade on Wednesday, citing a significant improvement in the country’s public finances, but the high current account deficit remains a source of concern for investors.   Rather than raising interest rates the central bank has focused on squeezing liquidity to keep monetary conditions tight as it seeks to ensure a soft landing for the economy this year after 8.5 per cent growth in 2011. The government forecasts 4 per cent growth this year. On Thursday the bank kept its main policy rate, the one-week repo rate, at 5.75 per cent, maintained its borrowing rate at 5 per cent and its overnight lending rate at 11.5 per cent. All 11 analysts polled by Reuters had expected it to keep its main rates on hold. The central bank said raising the limit of lira reserves that can be held in forex would boost central bank reserves by $2.7 billion and provide 2.8 billion lira liquidity to the market. “The central bank appears to have adopted a less hawkish rhetoric,” said Ekspres Invest economist Nilufer Sezgin. “We read the statement to indicate a lower blended cost of funding for the near future as long as global risk appetite does not weaken remarkably and the lira does not depreciate significantly,” she said. From gulftoday

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Arab Today, arab today turkey’s cb keeps interest rates on hold Arab Today, arab today turkey’s cb keeps interest rates on hold

 



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