DECISION OF THE MONETARY POLICY COMMITTEE
Central bank: tcmb | Type: decision | Date: 2006-02-24

No: 2006 - 08
February 24, 2006
DECISION OF THE MONETARY POLICY COMMITTEE
Meeting Date: 23 February 2006
Committee Members Who Participated in the Meeting
Süreyya Serdengeçti (Governor), Erdem Ba şçı, Şükrü Binay, Güven Sak, Fatih
Özatay, Durmu ş Yılmaz
(Sedef Ayalp could not participate in the meeting due to being on leave.)
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The Monetary Policy Committee has decided to keep the short-term interest
rates (policy rates) unchanged at the CBRT Interbank Money Market and the Istanbul
Stock Exchange Repo-Reverse Repo Market:
a) Overnight Interest Rates: The CBRT borrowing interest rate is 13.50
percent, and the CBRT lending interest rate is 16.50 percent,
b) Late Liquidity Window Interest Rates: Within the framework of the Late
Liquidity Window Facility, the CBRT overnight borrowing interest rat e applicable
between 16:00 – 16:30 hours at Interbank Money Market is 9.50 percent. Lending
interest rate is 19.50 percent,
c) The interest rates applicable to overnight and one-week maturity borrowing
facilities provided for primary dealer banks via repo transactions w ithin the
framework of open market transactions are 15.50 percent.
The Monetary Policy Committee has concluded that, although there seem s to
be favorable developments in some cost factors, the data announced recentl y on
inflation and economic activity do not significantly change the outlook el aborated in
the Inflation Report. The forecasts indicate that the disinflation pr ocess, which has
come to a halt in the first quarter of 2006, will resume in the sec ond quarter. Despite
this downward trend, in light of current data, end-year inflation is mor e likely to be
above 5 percent rather than below 5 percent. The cautious approach in monetar y
policy should be maintained due to the continuation of price rigidities in the service
sector, the reduction of the contribution of supply and demand conditions to infla tion,
and the continued risks around the costs of raw materials. On the other hand, the
decrease in the risk premium has been noted and is being monitored with a view to
assessing whether it is going to be enduring or temporary.
In the light of currently available information, policy rates are less likely to
increase, rather than remain stable or decrease in the medium-te rm. In the near-term,
however, the likelihood of policy rates to remain stable seems to have been lessened
somewhat since the last meeting. This policy perspective will e nsure that inflation is
in line with the target path around mid-2007. On the other hand, it should be
emphasized that any new data and information associated with the infl ation outlook
will lead the Monetary Policy Committee to potentially revise its stance about the
The assessments of the Monetary Policy Committee that constit ute the
rationale of the above-mentioned decision will be published within five working days.