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Central Bank of Turkey MPC Special Meeting

The Central Bank of Turkey, or CBT, just released a press release saying that the Monetary Policy Committee, or MPC, will be holding a special meeting tomorrow Thursday (10.00-12.00) to “assess the recent worries regarding the public debt problems in some European countries and global growth outlook.”

They will announce their decision at 12.00: I am no Nostradamus, but they’ll probably narrow the interest band corridor significantly, by 3 percent or so.

BTW, if you are working at the CBT: Feel free to use my liberal translation of the press release, as an English version is not up yet.

BTWW, at -0.41 percent mom (6.31 percent yoy), inflation just came out to be much lower than expected. I might write more on that once my friends at Turkey Data Monitor put the data up.

8 Responses to “Central Bank of Turkey MPC Special Meeting”

RogoCopAugust 3rd, 2011 at 9:09 pm

Why not just allow the currency to depreciate? I mean, what's so special about 1.72 or 1.73? It's already fallen >20% against the dollar. If the plan is to help rebalance the economy and reduce the CAD, wouldn't a weaker currency help?

L_GAugust 3rd, 2011 at 11:05 pm

Actually lower lira does not help Turkey at all. CAD may narrow for a while, but there is no structural adjustment.

Dear Mr Deliveli,
what is the effect of narrowing the interest rate corridor? Why do they do it if they do it?

edeliveliAugust 4th, 2011 at 1:16 am

Sorry I am on the way to London, so I will do quick replies:

@Rogocop: Nothing in theory, but it seems that for various reasons, this seems to be more or less the CBT's threshold tolerance level.

@L_G: The idea is that once you narrow the interest rate corridor, the volatility in the lira will decrease and Turkey will attract short-term flows and lira will appreciate. But I will let Rogocop explain why it might not work, as he is kind of skeptical on the whole idea, as I am "being called in" (to the plane to Istanbul):)

edeliveliAugust 5th, 2011 at 11:55 am

I honestly don't think the CBT's measures will work, but at least, they are responding to the crisis rather than creating one:)

Abe_RudderAugust 5th, 2011 at 2:38 pm

what if there wont be another global recession? we will end up having a very huge CAD bomb in our hands, dont you think?

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