© Reuters Investing.com – The Turkish lira fell to new lows after Ankara’s central bank raised interest rates by 650 basis points. The currency hit all-time lows against the euro and the dollar, worrying investors and economists.
It recently increased by 2.27% to 24.10 TL, while it increased by 2.32% to 24.49 TL.
The decision of the Central Bank of Turkey to raise the main interest rate by up to 650 basis points to 15% was seen as a positive step, but it did not meet the expectations of economists who had expected to raise the interest rate to 21% to support and restore the lira. Market confidence.
In the accompanying monetary policy statement, the central bank hinted at more interest rate increases, but according to Liam Beach, chief economist for emerging markets, “more increases are needed in the upcoming meetings to address the inflation problem in Turkey. Communications indicate that this will happen.” , although the tightening will be more gradual than expected a few weeks ago. We still believe rates will rise to 25-30% over the course of the year.”
The key rate hike marked the beginning of a new era of monetary policy under the leadership of Hafiz Gay Erkan, the first female head of the central bank. Erkan was appointed by the newly elected President Erdoğan to pursue a more rational monetary policy and control high inflation.
A novel contrary to what happened in recent years, when Erdogan implemented an unconventional monetary policy characterized by low interest rates despite high inflation.
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