DECISION OF THE MONETARY POLICY COMMITTEE
Central bank: tcmb | Type: decision | Date: 2006-06-08

No: 2006-25
8 June 2006
DECISION OF THE MONETARY POLICY COMMITTEE
Meeting Date: 7 June 2006
Committee Members Who Participated in the Meeting
Durmu ş Yılmaz (Governor), Erdem Ba şçı, Burhan Göklemez, Güven Sak, M. İbrahim
Turhan, Mehmet Yörüko ğlu.
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The Monetary Policy Committee has decided to increase short-term interest
rates (policy rates) at the CBRT Interbank Money Market and the Istanbul Stock
Exchange Repo-Reverse Repo Market as follows:
a) Overnight Interest Rates: The CBRT borrowing interest rate is increased to
15 percent from 13.25 percent, and the CBRT lending interest rate is increased to 18
percent from 16.25 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 4:00 p.m. – 4:30 p.m. at Interbank Money Market is increased to 11 percent
from 9.25 percent. Lending interest rate is increased to 21 percent from 19.25
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 increased to 17 percent from 15.25
According to the April and May inflation figures, the annual inflation rate
significantly exceeded the target path. Moreover, annual inflation fi gures to be
recorded in the next months might further go up temporarily, with the pa ss-through
effect of the exchange rate movements arising from the recent volatility in financial
markets. The Monetary Policy Committee has deemed it necessary to revise the
policy rates in order not to let such temporary developments cause per manent effects
on the medium-term expectations and pricing behaviors, and also to make s ure that
the medium-term inflation trend is kept in line with the targets.
In light of currently available information, the policy rates are less likely to
rise in the short-term, compared to the previous period. However, it should be
reminded that the direction of monetary policy decisions might change conditional on
developments pertaining to inflation outlook. Policy decisions will be base d on a
perspective in which inflation would converge to the target towards the end of 2007.
Therefore, accompanied by the envisioned decline in inflation, the directi on of policy
rates would be downward as well in the medium-term.
It should be emphasized that any new data or information associated wi th the
inflation outlook will potentially lead the Monetary Policy Committe e to revise its
future stance.
A broader summary of the assessments of the Monetary Policy Comm ittee
will be published within five working days.