Under new leadership, Turkish Central Bank delivers largest rate hike in two years
Following a shakeup in Turkey’s economy team, Central Bank policy-makers raised a key interest rate to 15% Thursday, pledging to fight high inflation and bolster the nation’s troubled economy.
ISTANBUL — Turkey’s Central Bank announced its largest interest rate hike in two years Thursday, sending the Turkish lira soaring on expectations the nation’s new economic team will pursue more predictable monetary policies.
In a statement issued Thursday afternoon, the Central Bank’s Monetary Policy Committee decided to increase the one-week repo rate by 475 basis points from 10.25% to 15%, as forecasted by a Reuters poll. The committee also moved to end a multitude of complex backdoor tightening measures, opting instead to provide all funding through the main policy rate while pledging to fight the nation’s double-digit inflation.
“In the periods ahead, all factors affecting inflation will be taken into account, and the tightness of monetary policy will be decisively sustained until a permanent fall in inflation is achieved,” the Monetary Policy Committee said in a statement Thursday.
Upon news of the decision, the Turkish lira rallied as much as 2.5% against the US dollar before settling at about a 2% gain, trading at 7.57 per greenback at 7 p.m. in Istanbul. The lira remains down about 22% since the start of the year after reaching a series of record lows in recent months.
