Thursday, 13 September 2018

Turkey's central bank raises interest rate to much higher than expected 24%

Turkey's central bank raised its interest rate to a much higher than expected 24% on Thursday, triggering a surge in the country's flagging currency. 
The surprise move by the bank comes as Turkey has been battling through one of the most troubled periods for its economy under the rule of President Recep Tayyip Erdogan, which saw runaway inflation and the Turkish lira battered on currency markets in August.
The Central Bank of the Republic of Turkey (CBRT) raised the rate from 17.75% to 24%,
significantly higher than the analysts' consensus of 21%, and in apparent defiance of the president, who has regularly expressed resistance to raising rates.

The lira reacted strongly to the rate rise, initially up 5% in value to 6.0 lira to the US dollar, later settling up more than 2.7% at 6.15 to the dollar.

Turkey's central bank, which described the hike as a "strong monetary tightening to support price stability", had left interest rates untouched since early June, causing markets to question just how independent bank policy was from the country's president.

There had been indications from Turkey's central bank that it would raise rates, after inflation came in at nearly 18% in August, according to official data.

The embattled currency has fallen by 40% this year amid a lack of interest rate hikes to control inflation.

SKY     News.

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