ISTANBUL: Turkey’s central bank raised its benchmark rate by a hefty 625 basis points, the biggest such increase in President Tayyip Erdogan’s 15-year rule, boosting the lira and possibly easing investor concern over his influence on monetary policy.
The bank’s Monetary Policy Committee raised the one-week repo rate to 24 per cent, meaning it has now increased interest rates by 11.25 percentage points since late April in an attempt to put a floor under the tumbling currency.
Its decision came despite Erdogan repeating his opposition to high interest rates earlier in the day, saying high inflation was a result of the central bank’s wrong steps.
All 11 economists in a Reuters poll had forecast the bank would tighten, with the predictions ranging between 225-725 basis points as it balances concerns over the lira’s weakness with worries about a sharp economic slowdown.
Turkey’s currency crisis has been driven by concerns about Erdogan’s influence on monetary policy, but also more recently by the country’s diplomatic row with the United States. — Reuters
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