The interest rate increased from 17.5% to 25%.
ISTANBUL – Reuters
Posted on: August 24, 2023: 03:06 PM GST Last updated: August 24, 2023: 05:25 PM GST
Turkey’s central bank raised key interest rates more than expected, increasing them by 750 basis points to 25% on Thursday, pushing the lira to a rare high.
The move signaled the authorities’ determination to tackle skyrocketing inflation as part of a general retreat from unconventional fiscal policies.
The surprise move sent the interest rate to the highest level since 2019 and pushed the Turkish lira to its strongest level since mid-July. The central bank has raised the one-week repo rate by 1,650 basis points since June.
The Monetary Policy Committee, which includes three members participating for the first time and considered hawkish, said it would raise interest rates “as needed in a timely and gradual manner” to moderate inflation, which rose to nearly 48% last month.
Analysts say the move is the clearest yet of a move toward conventional politics after years of unorthodox politics under President Recep Tayyip Erdogan, and it should help curb inflation expectations.
The lira has touched historic lows on an almost daily basis over the past few weeks, including minutes before the announcement of new financial policy decisions. But it jumped by more than 3% against the dollar after the decision was announced, and it was recorded at 12:05 GMT 26.41.
Turkish bank stocks rose nearly 10%, lifting the broader Borsa Istanbul index, while dollar-denominated government bonds jumped more than two years, according to Tradeweb data.
2023-08-24 13:25:00
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