DECISION OF THE MONETARY POLICY COMMITTEE
Central bank: tcmb | Type: decision | Date: 2006-01-24

No: 2006 - 5
January 24, 2006
DECISION OF THE MONETARY POLICY COMMITTEE
Meeting Date: 23 January 2006
Committee Members Who Participated in the Meeting
Süreyya Serdengeçti (Governor), Sedef Ayalp, Erdem Ba şçı, Şükrü Binay, Güven
Sak, Fatih Özatay
(Durmu ş Yılmaz could not participate in the meeting due to being on leave.)
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The Monetary Policy Committee has concluded that the data announced in t he
recent period since the last meeting did not lead to a significant change in the inflation
and monetary policy outlook. It is estimated that although the downward tr end of
inflation may be interrupted in the first quarter of 2006, it will re sume its trend
starting from the second quarter of 2006. Despite this downward trend, in t he light of
current data the year-end inflation is more likely to be above 5 perc ent rather than
below 5 percent. The major reasons behind this argument are the continuation of price
rigidities in the service sector, the diminution of support provided by suppl y-demand
conditions to inflation, the persistence of uncertainties around oil price s and
international liquidity conditions and the fact that the other favorable effects have not
been effective enough to offset these negative developments. As a res ult, it has been
decided to keep the short-term interest rates unchanged at the CBRT Interbank
Money Market and at the Istanbul Stock Exchange Repo-Reverse Repo Mar ket as
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.
In the light of the currently available information, the short-term interest rates
are less likely to move upward, rather than going downward or remaining stable in the
medium-term. In the near-term, however, the short-term interest ra tes are more likely
to remain stable. This policy perspective will ensure that the inf lation is in line with
the target path around mid-2007.
On the other hand, it should be underlined that any new data and information
associated with the inflation outlook in the next period will make the Monetary Policy
Committee to revise its stance about the future.
The assessments of the Monetary Policy Committee that constit ute the
rationale of the above-mentioned decision will be published within five working days.