THE DECISION OF THE MONETARY POLICY COMMITTEE
Central bank: tcmb | Type: decision | Date: 2006-10-19

No: 2006-46
19 October 2006
THE DECISION OF THE MONETARY POLICY COMMITTEE
Meeting Date: 19 October 2006
Committee Members Present at the Meeting
Durmu ş Yılmaz (Governor), Erdem Ba şçı, Burhan Göklemez, M. İbrahim Turhan,
Mehmet Yörüko ğlu.
The Monetary Policy Committee (Committee) has decided to keep short-
term interest rates (policy rates) unchanged in the Inter-bank Money Market and
the Istanbul Stock Exchange Repo-Reverse Repo Market as follows:
a. Overnight Interest Rates: The overnight borrowing interest rate is 17.50
percent, and the overnight lending interest rate is 22.50 percent,
b. Late Liquidity Window Interest Rates: Within the framework of the Late
Liquidity Window Facility, the overnight borrowing i nterest rate valid between 4:00
p.m. – 4:30 p.m. in the Inter-bank Money Market is 13.50 percent, while the lending
interest rate is 25.50 percent,
c. The interest rate on overnight and one-week maturity borrowing facilities
provided for primary dealer banks via repo transactions within the framework of
open market transactions is 21.50 percent.
The Monetary Policy Committee considers that, the infla tion outlook of the
last month did not change significantly compared to the previous period. Leading
indicators confirm our earlier conjecture of a moderate slow down in aggregate
demand. While the private sector demand indicators are pointing to a significant
slowdown, the foreign demand remains relatively strong , though not as much as
envisaged before. The improvement in inflation expect ations continues. However,
the factors such as the continued presence of a gap between the medium-term
inflation expectations and the targets, the emergence o f new risks related to
services prices and the continuation of uncertainties in th e global economy
necessitate the monetary policy to remain cautious in the medium term.
In light of these developments, the Committee perceive s that maintaining
the cautious stance is necessary for the inflation rate to converge to the 2007 year-
end targets. The Committee closely monitors the lagged effects of the monetary
tightening that has been carried out since June. In addi tion, the impact of the
incomes policy and the non-interest public sector expendit ures on the 2007
inflation are closely monitored as well. The CBRT will not hesitate to tighten
monetary policy, in case developments with unfavorable effects on medium-term
inflation outlook are observed.
It should be emphasized that any new data or informat ion on inflation
outlook will lead the Committee to revise its future stance.
A brief summary of the evaluations of the Committee w ill be released within
five working days.