Turkey Raises Repo Rate to 16.5 Percent in Simplification Move

Turkey’s central bank has decided to more than double its one-week repo rate to 16.5 percent from June 1, equalizing that rate with the current main funding rate and setting it as the new benchmark, it said in a statement on its website.

The move is meant to finalize simplification of the Turkish central bank’s multi-rate monetary policy framework, it said. The overnight lending and borrowing rates will be set at 1.5 percentage points higher and lower than the policy rate, respectively, it said. That would bring them to 18 percent and 15 percent, from 9.25 percent and 7.25 percent currently.

The one-week repo rate is currently at 8 percent. It was previously the central bank’s main funding tool, but hasn’t been used since January 2017.

The lira strengthened after the announcement and was trading at 1.9 percent higher at 4.6262 per dollar at 11:34 a.m. in Istanbul.

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