Feb 19, 2014
Turkey’s central bank promised
economists that its policy is becoming simpler and more
predictable, according to two people who attended a private
meeting in Ankara today.
Deputy Governor Mehmet Yorukoglu and Abdullah Yavas, a
member of the monetary policy committee, told the economists
that the bank is moving toward a more orthodox policy where the
benchmark one-week repurchase rate will be the main instrument
for funding banks, according to Bora Tamer Yilmaz of Ziraat
Investment and Inanc Sozer of Odeabank AS, who were at the
meeting.
“Bank officials said that they wanted their policies to be
viewed as more orthodox and more predictable,” Yilmaz said.
Turkey’s central bank developed an interest-rate corridor
since 2010 that allowed it to vary monetary conditions on a
daily basis. Critics said the system was over-complicated, and
called it a way of circumventing political opposition to higher
rates. The bank reversed course last month, raising all its main
rates at an emergency meeting as it sought to stem a plunge in
the lira.
The bank will keep policy tight until it’s confident that
inflation, which was 7.8 percent last month, is slowing toward
the target of 5 percent by mid-2015, Sozer said.
The move toward orthodoxy suggests the rates corridor will
be symmetrical, with the overnight lending and borrowing rates
that mark its boundary at an equal distance from the benchmark,
Yilmaz said.
Link: http://www.bloomberg.com/news/2014-02-19/turkey-promises-orthodox-policy-at-private-central-bank-meeting.html?cmpid=yhoo.
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