This new increase, of unexpected magnitude, bears the signature of the new Turkish economic team that took office after the re-election of President Recep Tayyip Erdogan at the end of May.
He turkish central bank surprised on Thursday with a sharp rise in interest rates of reference, which went from 17.5% to 25% to try to avoid a rebound in the inflation. In this way, he changes his strategy after months in which he had a reverse policy.
“The Committee decided to continue the process of monetary tightening to establish as quickly as possible the course of the disinflation (…) and control the deterioration of price behavior,” the central bank said in its statement.
“Some recent indicators point to a continued increase in the underlying trend of inflation,” he added.
This new increase, of unexpected magnitude, bears the signature of the new Turkish economic team that took office after the re-election of the president at the end of May Recep Tayyip Erdoganstaunch supporter of low interest rates.
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before a inflation still close to 48% and one economic crisis from which Turkey suffers to get out, the head of state consented for now to an increase in rates
After two more limited increases in the reference rate, the Turkish president finally gave carte blanche to the new governor of the central bank, Hafize Gaye Erkan, and to the Minister of Economy Mehmet Simsek, analysts believe. On Thursday afternoon, the Turkish lira gained some value against the dollar, trading around 26.81 lira to the dollar.
After the elections, Ankara reduced its device of turkish lira defense, artificially supported for months by massive currency sales to prevent its collapse. The currency lost a quarter of its value compared to the dollar since the end of May.
Source: Ambito
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