By Zeynep Akyil and Bahattin Gonultas
The Turkish Central Bank will reduce its number of Monetary Policy Committee meetings from 12 to eight times a year, Deputy Prime Minister Mehmet Simsek told Anadolu Agency on Sunday.
The move is intended to give the bank more time to formulate effective monetary policy responses.
"With a new legal arrangement, the number of the bank's interest rate-determining monthly meetings will be reduced to at least eight times a year," Simsek -- who is responsible for Turkey's economy -- said.
"Reducing the number of meetings will give more time to the bank to establish an effective monetary policy response based on analyzes which reflect key trends and are free of short-term volatility," he said.
Simsek said this is in line with international practice just like U.S. Federal Open Market Committee meetings.
"For example, in nine of 14 developed countries, such meetings are held eight times a year. South Korea and Israel have reduced their annual number of such meetings to eight," Simsek added.
The minister said Turkey’s central bank had largely simplified its complex monetary policy:
"There will be only a single-rate policy and this does not change very often. In this sense, the four-week cycle [monthly decision about interest rate] is thought to be short because the bank wants to see the general trend.
“Now that it is going to use a single-rate policy, we can actually think this is the next step in simplification. In line with the rate policy, it reduces the number of Monetary Policy Committee meetings in order to act with more information."
According to Simsek, with the single-rate policy, the bank will focus more on its main task and will have more opportunities to look at more data.
"It will give clearer and simpler messages to the market with more data," he added.
The central bank will continue to directly employ its monetary policy instruments to ensure price stability, Simsek added.
Turkish Central Bank uses a complex system of multiple rates -- known as an interest rate “corridor” -- to set policy.
On Oct. 20, the central bank held key interest rates at their current levels after reducing its main interest rate over the last seven months.
The bank kept its one-week repo rate at 7.50 percent while the borrowing rate remained at 7.25 percent, in line with expectations.
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