DECISION OF THE MONETARY POLICY COMMITTEE
Central bank: tcmb | Type: decision | Date: 2006-05-25

No: 2006-23
25 May 2006
DECISION OF THE MONETARY POLICY COMMITTEE
Meeting Date: 25 May 2006
Committee Members Who Participated in the Meeting
Durmu ş Yılmaz (Governor), Erdem Ba şçı, Rifat Günay, Çi ğdem Köse, Güven Sak
(Şükrü Binay could not attend to the meeting as he was on leave)
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The Monetary Policy Committee has decided to keep short-term interest rates
(policy rates) unchanged 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 13.25
percent, and the CBRT lending interest rate is 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 9.25 percent. Lending
interest rate is 19.25 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 15.25 percent.
The Committee perceives that the latest incoming data about output, de mand
and inflation are largely consistent with the medium-term outlook el aborated in the
Inflation Report, putting aside the recent volatility in financial m arkets. Despite the
rise in inflation during the first four months of 2006, the rate of incre ase in the index,
including April, which is calculated by excluding items such as alc oholic beverages-
tobacco, energy, gold and unprocessed food that are beyond the control of monetar y
policy, remains steady at low levels. However, after the recent financial turbulences, it
has become more likely that inflation might realize above the 2006 ye ar-end inflation
The Central Bank will surely respond if there are strong indicati ons that the
inflation could considerably deviate from the targets in the medium-t erm. In light of
available information, it should be noted that, although it is still ear ly to change the
medium-term outlook, the policy rates are less likely to decrease in the short-term. In
the coming period, the policy rate decisions will be conditional on the i nternational
liquidity conditions, changes in risk premiums and other developments. The dir ection
and magnitude of policy response can vary depending on whether the effects of
fluctuations are temporary or permanent.
It should be emphasized that any new data and information associated with 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 Com mittee
will be published on Friday, 26 th May 2006.