Central Bank might cut main policy rate

Central Bank might cut main policy rate

MARDIN - Reuters
Central Bank might cut main policy rate

Turkey’s Central Bank Governor Erdem Başçı speaks about ‘monetary policies’ at a meeting in southeeaster Turkish province of Mardin.

Turkey’s central bank may consider cutting its main policy rate if the lira appreciates too sharply in real terms, Governor Erdem Başçı said yesterday.

He added that a low interest rate regime was currently in the economy’s best interests.

Başçı said the central bank could make a “measured” cut in its one-week repo policy rate if the real effective exchange rate of the lira exceeds 120 on an index measuring the weighted average of domestic prices relative to those of trade partners.

The latest real effective exchange rate (REER) was due to be announced today. It was at 119.69 in February, down from a revised 120.39 in January.

The bank’s monetary policy committee will meet on April 16 for its monthly rate decision.

Last month it unexpectedly slashed its overnight lending rate but moved to tighten liquidity overall by reducing lira funding and draining more foreign currency and gold from the market.

Speaking at a conference in the southeastern province of Mardin, Başçı also said the bank would continue to adjust required reserves and reserve option coefficients if loan growth runs at above 15 percent.

He said he expected the current account deficit, Turkey’s main economic weakness, to be somewhat higher as a percentage of national output this year than last.