The Turkish central bank’s rate hike was double economists’ expectations.
Türkiye’s central bank hiked its key interest rate to 40% on Thursday in an effort to tackle soaring inflation.
The rise by another 500 basis points from the previous 35% is double the increase that economists expected. The projection was for an increase of 250 basis points.
The move was seen by the market as a continuation of the central bank’s attempts to tame surging inflation and prop up a falling Turkish lira. Inflation in the country came in at a massive 61% in October.
“Really impressive move by the CBRT (Central Bank of the Republic of Türkiye) – probing their orthodoxy and getting well ahead of expectations,” said Timothy Ash, emerging markets strategist at BlueBay Asset Management.
“These guys and girls are serious about fighting inflation,” he added. “We need to give them credit for that.”
The central bank, under its new chief Hafize Gaye Erkan, a former Wall Street banker, has been ratcheting up interest rates in a series of increases from 8.5% to the current 40% in a bid to lift the cost of borrowing and slow down price rises.
“The pace of monetary tightening will slow down and the tightening cycle will be completed in a short period of time,” the regulator said, adding that interest rates would stay at a high level for “as long as needed to ensure sustained price stability.”
The decision, which has been painful for Turks, comes as the country seeks to turn around several years of skyrocketing inflation and a dramatically weakened currency, largely resulting from the government’s stubbornly loose monetary policy.
The lira has lost more than 80% of its value against the US dollar over the last five years.
Image credit: Sinsai Muldur
My interest rate in Turkey is fixed at 0%
i would buy grocery such as rice, pasta and lentils and have plenty stored away. Oil, and condensed milk and meat in tins.
I have already done it as hard times are going to hit all of us. Most governents have been spending too much and are broke.
And so are most banks.
You can always give away to food banks the stored goods if you don t need them
Occupied Byzantine
Coming soon to a bank near you, more quickly than you can imagine!
Many mainline NZ Banks are now seeing their employees leave for other jobs (what few there are ) away from the corrupted banking system in Australasia.
Those employees who have either left or are now leaving know what is coming…with the shut-down of Bank Branches, human Tellers, and cash disappearing into CBDC with every customer rated not only for his/her credit rating, but soon also for their ‘Social Credit Score’.