Central Bank of Turkey

September 23, 2021

The biggest central bank surprise move today was made in Turkey, where officials of the TCMB slashed their one-week repo rate by a full percentage point to 18.0% even though inflation keeps cresting and is currently at a 16-month high of 19.25%. As recently as March 2021, the rate had been lifted by 200 basis points to 19%, and that tightening followed 875 basis points of rate increases implemented in the final four months of 2020. The primary reason given for this policy flip-flop is the observation that “tightness in monetary stance has started to have a higher than envisaged contractionary effect on commercial loans.”

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

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