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Turkish central bank raises interest rate and lira rises

2018-09-13 12:24 pm | Resource: News | No Views : 304

The Central Bank of Turkey raised its key interest rate to 24 percent on Thursday, beating economists' expectations. The Monetary Policy Committee, led by bank governor Murat Setinkaya, raised the repo rate for one week to 24 percent from 17.75 percent. Economists had expected an increase to 20.75-22 percent

The Turkish central bank increased the repurchase rate by one week to 625 basis points to 24%, exceeding analysts' expectations of 425 basis points to 22%.

The bank's decision was announced hours after Erdogan raised the turmoil by repeating his hostility to rising borrowing costs and issuing an order restricting the use of foreign currencies in local transactions. "If necessary, further monetary tightening will be implemented," the bank said in a statement. The rate hike came in tandem with the bank's pledge of strong tightening to support price stability.

The central bank said that recent developments regarding inflation expectations indicate a significant risk of price stability. The central bank also said it would maintain its hawkish stance on monetary policy "decisively until inflation expectations show significant improvement."

Turkish Lira

 The Turkish lira rose on Thursday after the country's central bank raised interest rates more than expected.

The pound has lost about 40% of its value against the dollar since the beginning of the year, thanks to investors' concerns about the independence of the central bank and the diplomatic and trade fighting between Turkish President Recep Tayyip Erdogan Erdogan and Washington.

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