THE DECISION OF THE MONETARY POLICY COMMITTEE
Central bank: tcmb | Type: decision | Date: 2006-12-21

No: 2006-54
21 December 2006
THE DECISION OF THE MONETARY POLICY COMMITTEE
Meeting Date: 21 December 2006
Committee Members Participated in 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 inte rest rate is 17.50 percent,
and the overnight lending interest rate is 22.50 percent,
b) Late Liquidity Window Interest Rates: Within the fra mework of the Late Liquidity
Window Facility, the overnight borrowing interest 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 Committee considers that the recent data is broadly consistent with the
outlook presented in the October Inflation Report. The slowdown in total demand
continues as expected. While the private sector demand indi cators point to a
significant slowdown, the foreign demand remains relati vely strong. Nevertheless, the
tight monetary policy should continue due to factors such as the gap between the
medium-term inflation expectations and the targets, the risks related to the services
price inflation and the uncertainties in the global eco nomy. Moreover, the Committee
judges that inflation risks regarding the unprocessed food prices remain.
In light of these developments, the Committee assesses that meeting the
medium term inflation targets would necessitate the mai ntenance of the cautious
policy stance. The Committee closely monitors the lagged effects of the monetary
tightening since June. Moreover, the potential impact of the progress in the structural
reform agenda and the developments in the incomes policy as well as the non-interest
public sector expenditures on the inflation and the infl ation expectations are carefully
evaluated. The CBRT will not hesitate to tighten mone tary policy in case of any new
developments that would have unfavorable effects on the m edium-term inflation
It should be emphasized that any new data or informat ion related to inflation
outlook will lead the Committee to reconsider its stance.
A brief summary of the assessments of the Committee will be released within
five working days.