In order to fight inflation, the Turkish central bank will increase the benchmark repurchase interest rate by 500 basis points to 40%on Thursday (November 23).The Turkish central bank is expected to reach 65%by the end of this year, and will drop to 36%by the end of 2024.
The interest rate hike was twice as expected by economists. Economists predicted 250 basis points to raise interest rates.
After the news was announced, the lira exchange rate against the US dollar rose to 28.4988, and now it has fallen to 28.77 front lines.
The Turkish stock market is not affected, bist
The 100 index rose 0.3%.
This latest initiative means that since Turkish President Erdogan was elected again in May, the Turkish central bank led by President Elkan has increased borrowing costs by 30 percentage points.
Erdogan allowed the monetary policy committee to tighten the policy significantly. Previously, he had opposed the use of interest rates to suppress inflation. Critics said that this position has exacerbated price pressure in recent years.
As the overall interest rate is finally higher than the expected level of inflation, the Monetary Policy Committee stated that it will slow down from now on.
The Monetary Policy Committee stated: "The current level of currency tightening has been significantly close to the level required to establish the process of anti -inflation." "Therefore, the pace of currency tightening will slow down, and the tightening cycle will be completed in a short time."
Before the Turkish central bank made this decision, a series of interest rate hikes hurt the Turks.Turkey is trying to reverse the situation of soaring inflation over the years and the sharp depreciation of currencies -this is largely caused by the stubborn and loose monetary policy of the Ankara government.
The exchange rate of the US dollar against the US dollar has fallen by 35%so far this year, and the exchange rate against the US dollar against the US dollar in the past five years has fallen by more than 80%.
