Turkey’s central bank cites a worsening inflation outlook
In a surprising move, the Central Bank of Turkey raised its key interest rate by 500 basis points to 50% on Thursday, citing the aggravation of inflation outlook and committing to maintain a tight stance until there is a significant and sustained decline in the trend.
According to Reuters, the central bank has now raised interest rates by 4,150 basis points from 8.5% since last June, after President Tayyip Erdogan’s victory in the May elections and a shift towards more “orthodox” economic policy.
Official inflation in the neighborhood has risen to 67% and is expected to ease around the middle of the year, although the slide in the pound and the fall in foreign exchange reserves had fueled some expectations of more rate hikes ahead.
In a Reuters poll20 of the 22 surveyed market players expected that the bank will keep interest rates steady in Marchwhile two others predicted an increase of 250 basis points. The poll showed, however, that a strong majority expected another increase later this year.
Source: Skai
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