ANKARA — Turkey’s Central Bank on Thursday hiked interest rates by 250 basis points from 15% to 17.5%, a lower-than-expected rise that led to the Turkish lira sinking to new lows.
It’s the second rate hike in a row since an overhaul of the country’s economic management team that pledged rational and tighter monetary policies. In a statement following its monthly monetary policy committee meeting, the bank reiterated its commitment to tighter monetary policy.
“The committee decided to continue the monetary tightening process in order to establish the disinflation course as soon as possible, to anchor inflation expectations and to control the deterioration in pricing behavior,” the committee’s statement said.
“In our country, recent indicators point to continuation of the increase in the underlying trend of inflation. The strong course of domestic demand, cost pressures stemming from wages and exchange rates and the stickiness of services inflation have been the main drivers,” it continued.
