Turkey's cenbank says may do more to curb market volatility

Turkey's central bank said on Thursday it would take additional actions if necessary to ensure the smooth functioning of financial markets, as it assesses risks to inflation from recent market developments.

The detention of Istanbul mayor Ekrem Imamoglu, President Tayyip Erdogan's main political rival, which sparked biggest protests in Turkey in more than a decade last week, had caused strong market volatility and a major market sell-off.

The Monetary Policy Committee (MPC) held an interim meeting to review financial market conditions last week and has implemented measures to support its tight monetary stance, the bank said in a statement.

The bank suspended one-week repo auctions and hiked its overnight lending rate to 46% in the interim meeting.

In a research note, Goldman Sachs said it expected the central bank to raise its policy rate by 350 basis points "to show its ability and willingness to implement its disinflation program".

The moves last week effectively raised its average cost of funding by 350 basis points, the Wall Street bank said, and allowed for more time for internal discussion with other stakeholders prior to raising the main repo rate.

Turkish Finance Minister Mehmet Simsek and Central Bank Governor Fatih Karahan told international investors on Tuesday that they would do whatever was needed to tame market turmoil.