Turkey raises rates sharply, boosts lira

Turkey raises rates sharply, boosts lira
The bank's Monetary Policy Committee raised the one-week repo rate to 24 per cent

By Reuters

Published: Thu 13 Sep 2018, 9:00 PM

Last updated: Thu 13 Sep 2018, 11:19 PM

Turkey's central bank raised its benchmark rate by a hefty 625 basis points on Thursday, the biggest such increase in President Tayyip Erdogan's 15-year rule, boosting the lira and possibly easing investor concern over his influence on monetary policy.
The bank's Monetary Policy Committee raised the one-week repo rate to 24 per cent, meaning it has now increased interest rates by 11.25 percentage points since late April in an attempt to put a floor under the tumbling currency.
Its decision came despite Erdogan repeating his opposition to high interest rates earlier in the day, saying high inflation was a result of the central bank's wrong steps.
The central bank said there was still an upside risk to the inflation outlook from what it called a deterioration in pricing behaviour, despite weaker domestic demand conditions.
"Accordingly, the Committee has decided to implement a strong monetary tightening to support price stability," the committee's statement said.
All 11 economists in a Reuters poll forecast the bank would tighten, but with the predictions ranging between 225-725 basis points as it balances concerns over the lira's weakness with worries about an economic slowdown. 
 
 
 




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