A Turkish Central Bank Rate Cut and a Norwegian Rate Increase on the Same Day

December 16, 2021

Thursday’s central bank action illustrated the broadening diversity of monetary policies around the world amid rising inflation but also persistent uncertainty related to the coronavirus pandemic.

The Turkish lira got clobbered, slumping more than 5.0% further after the Central Bank of the Republic of Turkey reduced the one-week repo rate by another 100 basis point to 14%. Under political pressure and in spite of upwardly spiralingĀ  Turkish inflation, there have been four successive full-percentage point cuts since September.

The Bank of Norway‘s policy interest rate was raised by 25 basis points to 0.50%. An initial 25-basis point hike had been doneĀ  in September, and a released statement today suggests that as many as three such moves could happen next year. But “if there is a need for more stringent and protracted containment measures that pull down economic activity through spring next year, further rate hikes may be postponed.”

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

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