Central Bank of Turkey decreases interest rates

Central Bank of Turkey decreases interest rates

Central Bank of Turkey dropped the short due date interest validity from March 17, 2004 which it applies in repo-reverse repo market in constitute of Interbank Money Market and Istanbul Stock Exchange. According to the announcement made by Central Bank, overnight borrowing interest is decreased from 24% to 22%. In the other terms, one week borrowing interest rate is dropped from 24% to 22%. In the application of Late Liquidity Window framework, overnight lending interest rate of Central Bank is decreased from 34% to 32% in which its application at Interbank Money Market between 16.00-16.30 while the borrowing interest rates remained unchanged at 5%. Also, overnight and one week borrowing interest rates is dropped from 26% to 24% under the open market operations framework by the way of repo process to market maker banks. Central Bank stated that the decrease in interest rates is in relation with the ongoing decline in inflation, observable change in domestic demand and the stability in exchange rate. In addition to these factors, the decline in interest rates created a positive effect on Stock Exchange. However, there is no much brisk in exchange and bond market as the expected rebate of interest is reflected to the prices before.