Two Percentage Point Central Bank Rate Hike in Turkey

March 18, 2021

One currency to buck the downward trend of most currencies versus the dollar has been the Turkish lira, which has rebounded about 2% in response to a greater-than-expected 200 basis point increase in the Central Bank of Turkey’s one-week repo rate. Turkish CPI inflation has climbed to 15.6%. At 19%, the central bank interest rate is 10.75 percentage points above its 2020 low in June-August and at its highest point in a bit over a year and a half. An initial 200-basis point hike last September abruptly reversed a downward trend that saw cuts in each of the first five months of 2020 and totaling 375 basis points. A statement explaining today’s move says

The tight monetary policy stance will be maintained decisively, taking into account the end-2021 forecast target, for an extended period until strong indicators point to a permanent fall in inflation and price stability.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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