According to the Central Bank of the Republic of Turkey (TCMB), the Monetary Policy Committee has decided to keep short-term interest rates constant at the following levels:
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Overnight interest rates: Marginal funding rate at 11.25%, the interest rate on borrowing facilities provided for primary dealers via repo transactions at 10.75%, and borrowing rate at 7.5%;
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One-week repo rate at 8.25%;
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Late liquidity window interest rates (between 4:00p.m. — 5:00 p.m.): Borrowing rate at 0%, and lending rate at 12.75%.
“Inflation expectations pricing behavior and other factors that affect inflation will be closely monitored and the tight monetary policy stance will be maintained until there is a significant improvement in the inflation outlook,” the central bank stated.
The TCMB, which is nominally independent, has been under pressure from the government and the president Recep Tayyip Erdoğan to bring interest rates down to sustain growth.
Additionally, prime minister Ahmet Davutoğlu has said that he “sent a message” requesting lower interest rates to central bank governor Erdem Başçı during their talks on the 24th October, adding that the central bank will give him a detailed briefing in November before attending the G-20 Summit.
“I, personally, believe interest rates should be lowered, but I did not intervene in any of the central bank’s policies about this. I said the same thing to Başçı during his visit on the 24th October, I believe that an interest rate policy should be set so as to increase the confidence level in Turkey for the economy when commodity prices are decreasing and Turkey has achieved stability,” Davutoğlu said.
Ziraat Bank obtains approval for participation banking
Banking Regulation and Supervision Agency (BRSA) has reviewed Ziraat Bank’s application to obtain the approval for carrying out participation bank activities. BRSA approved this application and BRSA’s decision was published in the Official Gazette dated 15th October 2014 and numbered 29146.
According to the abovementioned approval decision, a participation bank will be established with TC Ziraat Bankası being the controlling shareholder and its subsidiaries Ziraat Sigorta, Ziraat Hayat ve Emeklilik, Ziraat Yatırım Menkul Değerler and Ziraat Teknoloji being other shareholders of the proposed participation bank.
BRSA’s decision states that the participation bank shall be established in Turkey with US$300 million founding capital.
Earlier this month, Ziraat Bank’s general manager Hüseyin Aydın stated that “I hope a Ziraat participation bank will be established within or towards the end of the first quarter of 2015”.
Ali Ceylan is a partner at Baspinar & Partners Law Firm. He can be contacted at
[email protected]
.