Istanbul, Aug 18 () - Central Bank of Turkey's Monetary Policy Committee (MPC) has decided to keep the policy rate unchanged at 7.50 percent, as expected. The MPC stated that, the developments made it necessary to maintain the cautious stance in monetary policy.
The Committee also kept other short term rates unchanged, marginal funding rate at 10.25 percent, the interest rate on borrowing facilities provided for primary dealers via repo transactions at 10.75 percent, and borrowing rate at 7.25 percent, said in the statement released by the Central Bank on Tuesday.
Food and energy price developments affect inflation favorably in the short run, while exchange rate movements delay the improvement in the core indicators, the MPC said. "The interest rate corridor will be made more symmetric around one-week repo interest rate and the width of the corridor will be narrowed."
The funding provided to primary dealers via repo transactions would be added to their limit of one-week repo auctions without changing the funding cost of primary dealers from the Central Bank, said in the statement. "Thus, quotation on the interest rate on borrowing facilities provided for primary dealers via repo transactions will be terminated."
Flexibility of FX selling auctions would be increased to reduce the exchange rate volatility, as the FX liquidity would be provided to the financial system through increases in the remuneration rate of Turkish lira required reserves or adjustments of Reserve Options Coefficients (ROC), it said.
Borrowing limits via foreign exchange deposit accounts would be increased, the MPC stated. "After the related changes, size of the FX liquidity that financial system can access from CBRT, which is the sum of FX holdings in ROM and limits of the foreign exchange deposit market, will be considerably above the external debt payments of the banks in the coming year."