DECISION OF THE MONETARY POLICY COMMITTEE
Central bank: tcmb | Type: decision | Date: 2006-04-27

No: 2006-20
April 27, 2006
DECISION OF THE MONETARY POLICY COMMITTEE
Meeting Date: 27 April 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 cut short-term interest rates
(policy rates) applied 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 reduced
from 13.50 percent to 13.25 percent, and the CBRT lending interest rate is reduced
from 16.50 percent to 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 decreased to 9.25
percent from 9.50 percent. Lending interest rate is decreased to 19.25 percent from
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 reduced to 15.25 percent from 15.50
The Monetary Policy Committee has concluded that recent developments do
not significantly change the medium-term outlook elaborated in the Infl ation Report
published in January. In the recent period, economic growth displayed a sta ble trend,
investments and increases in productivity continued while secondary effe cts of the
prices of oil and other commodities remained limited. When items suc h as energy,
unprocessed food and alcoholic beverages-tobacco that are beyond the control of
monetary policy are excluded, the general trend of inflation is obser ved to be
downwards. Annual inflation is expected to display a downward trend from t he
second quarter of the year onwards. However, the cautious approach in moneta ry
policy should be maintained in view of the continuation of price increases in the
services sector, the weakening contribution of demand conditions to inflati on and the
persisting high and volatile oil prices. Moreover, the international li quidity conditions
are being closely monitored.
In the light of currently available information, policy rates are less likely to
increase, rather than decrease or remain stable in the medium-te rm. It should be noted
that new data will be monitored carefully in the near-term. This policy perspective
will ensure that inflation is in line with the target path around m id-2007. Meanwhile,
it should be emphasized that any new data and 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 Com mittee
will be published within five working days.