Euro effect on Turkey allayed

Turkey's Central Bank yesterday warned the spread of Europe's financial woes was the biggest risk to global financial stability, but added the effect on Turkey so far was limited.

Earlier this month, the Central Bank, as part of its exit strategy announced in mid-April from crisis-induced loose monetary policy, declared a seven per cent one-week repo rate as its benchmark rate, replacing the 6.5 per cent overnight borrowing rate.

By late last year Turkey had slashed what were once some of the world's highest interest rates by a cumulative 10.25 percentage points to combat a deep recession, but an inflation surge has put the central bank under pressure to raise rates.

Consumer price inflation rose to 10.2 per cent in April year-on-year.

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