THE DECISION OF THE MONETARY POLICY COMMITTEE
Central bank: tcmb | Type: decision | Date: 2006-09-26

No: 2006-44
26 September 2006
THE DECISION OF THE MONETARY POLICY COMMITTEE
Meeting Date: 26 September 2006
Committee Members Participated in the Meeting
Durmu ş Yılmaz (Governor), Erdem Ba şçı, Burhan Göklemez, M. İbrahim Turhan,
Mehmet Yörüko ğlu.
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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 maturit y borrowing facilities
provided for primary dealer banks via repo transactions within the framework
of open market transactions is 21.50 percent.
The recently available data suggest that inflation out look has continued to
improve. Leading indicators confirm our earlier conjectu re that total demand
would slow down, albeit not as significantly. Although domestic demand
indicators point to a significant slowdown, foreign dema nd remains relatively
strong. Following the policy measures taken by the CBRT in June, inflation
expectations continued to improve in September. Furthe rmore, the recent
deceleration in the price increases in items such as energy, unprocessed
food, alcoholic beverages-tobacco and gold has had a posit ive impact on
annual inflation figures. However, factors such as the mi smatch between the
medium-term inflation expectations and the targets, an d the continuation of
uncertainties in both commodity prices and international liquidity conditions
necessitate the monetary policy to remain cautious.
In light of these developments, the Committee assesses tha t maintaining the
cautious stance for a while is necessary for the inflation rate to converge to
the 2007 year-end targets. The policy rate is expected to remain close to the
CBRT borrowing rate in the upcoming months. The CBRT will not hesitate to
implement further tightening, in case there are devel opments that would
suggest an unfavorable medium-term inflation outlook.
It should be emphasized that any new data or informat ion on inflation outlook
will potentially lead the Committee to revise its future stance.
A brief summary of the assessments of the Committee will be released within
five working days.