Turkey’s interest rate corridor policy questioned
ISTANBUL, Dec 1 (Reuters) The Turkish Central Bank Canada Goose Jackets rate corridor policy was called into question on Thursday, with Moody saying it was unclear why this approach canada goose coats was better than raising the policy rate and the banking association saying it created significant costs for banks.
Turkey central bank widened the interest rate corridor in October, raising the overnight canada goose lending rate to 12.5 percent from 9 percent in a bid to fight inflation and support the lira. Analysts saw this step as a sign of a more hawkish tone, and the canada goose store latest in a series of cheap canada goose uk unorthodox moves.
this interest rate corridor with the overnight lending rate and the one week repo Canada Goose Parka rate, it is not clear to us why this would be a better approach than simply increasing the policy rate, Moody analyst Sarah Carlson told journalists in a teleconference.
Separately, banking canada goose black friday sale association chairman Huseyin Aydin said at a conference in Istanbul that the rate corridor policy was creating notable costs for banks.
if the interest rate corridor is effective to a certain extent, it imposes significant costs on the banking sector, Aydin said.
He said it Canada Goose Coats On Sale was important for the BDDK banking watchdog to take measures on the issue and said that reducing reserve requirements on repos to zero could encourage banks to obtain forex resources.
Analysts also questioned the central bank (CBRT) policy, with the one week repo policy canada goose uk shop rate at a record low of 5.75 percent.
would argue that the current policy is sending a signal uk canada goose outlet tothe market that the CBRT wants its cake (growth) and wants to eat uk canada goose it (low inflation), but really is unwilling to do the right thing and hike policy rates permanently to address the issue of the current account deficit, said Royal Bank of Scotland economist Timothy Ash.
longer the CBRT keeps up with its current policy mix, the more likely Turkey is actually likely to Canada Goose Online face the hard landing that the CBRT argues it is trying to avoid.
CURRENT ACCOUNT CHALLENGE Moody analyst Carlson also said canada goose clearance sale Turkey current account deficit was the most significant challenge facing the country and that the inflation effects of the weak lira and the worsening international environment also gave cause for concern.
Turkey expects the current account deficit to soar to 9 10percent of GDP this year, surging from 6.7 percent in 2010.
Turkey canadian goose jacket rating could be upgraded if the country pursued fiscal and monetary canada goose clearance policies that reverse the recent growth in internal and external imbalances, Moody said late on Wednesday in its annual sovereign report on Turkey.
Turkey external deficits are regarded as the greatest flaw in an otherwise strong economy, but the government expects the canada goose coats on sale deficits to diminish as the economy begins to slow due to global concerns, notably the debt crisis in the euro Canada Goose online zone.
Record low interest rates have fuelled domestic demand and a credit boom that has propelled Turkey external deficits to critical levels, making it vulnerable to external shocks.
However, Canada Goose sale signs of a slowdown in economic activity in recent months have eased concerns about the deficit size canada goose uk outlet and allowed the central bank to prioritise the inflation cheap Canada Goose outlook.
The positive outlook on the Turkish government sovereign debt rating of Ba2 reflects Canada Goose Outlet the resilience of the country economy during the global financial crisis, Moody said.
But buy canada goose jacket cheap it also increased its assessment of the sovereign susceptibility to event risk from moderate to high due to the increase in external imbalances, she said.
Moody has a rating on Turkey canada goose uk black friday with a positive buy canada goose jacket outlook. Fitch Ratings revised Turkey outlook to from last month and affirmed the ratings at due to an increase in near term risks to macroeconomic stability. S rates Turkey with a positive canada goose factory sale outlook. (Reporting by Seda Sezer and Ebru Tuncay; editing by Anna Willard).