ANKARA
The Turkish central bank on Thursday published a new plan for its interest-rate decisions and general monetary policy.
The so-called 'corridor' system for interest rates will be reformed, the bank said in a statement.
The corridor indicates the range between the one-week repo rate, which is currently 7.50 percent, and the overnight rate of 10.25 percent.
"During normalization of global monetary policies, the interest rate corridor will be made more symmetric around one-week repo interest rate and the width of the corridor will be narrowed," the statement said.
This means that one rate will become higher, and the other lower, bringing the two rates close to becoming a single rate, explained Boris Tamer Yilmaz, an analyst with Ziraat Securities in Istanbul.
"By 'symmetric,' the bank means that there will be close to an even distance between the two rates," Yilmaz said.
So the key repo rate will rise, Yilmaz said. "This will tighten policy somewhat, but not very much."
Further measures included greater flexibility in foreign exchange auctions, a move which will permit the bank to have greater effect on the exchange rate of the Turkish lira.
Rates on foreign exchange deposits, which the central bank holds for Turkish banks, will be increased, in an effort to encourage savings of foreign currency.
Turkish corporates hold large amounts of dollar debt. The central bank will put in place a series of measures that will increase the size and flexibility of banks' holdings in foreign currencies.
Rates on Turkish lira deposits by banks will be revised to increase flexibility and decrease costs for Turkish banks.
