2023-08-24 13:02:29
The Turkish central bank came as a surprise on Thursday by raising its key rate sharply, from 17.5% to 25%, in order to prevent a rebound in inflation.
The Committee has decided to continue the process of monetary tightening in order to establish the course of disinflation as quickly as possible (…) and to control the deterioration in price behavior, the central bank indicated in its press release. Recent indicators point to a continued rise in the underlying inflation trend, she said.
This new rise, of an unexpected magnitude, bears the signature of the new Turkish economic team taking office after the re-election at the end of May of President Recep Tayyip Erdogan, despite being an ardent defender of low interest rates.
Faced with inflation still close to 48% and the economic crisis from which Turkey is struggling to emerge, the Head of State is agreeing to a rate hike for the time being.
After two previous limited increases in the key rate, the Turkish president finally gives free rein to the new governor of the central bank, Hafize Gaye Erkan, and to the Minister of Economy Mehmet Simsek, analysts believe.
In the early afternoon of Thursday, the Turkish lira gained slightly in value against the dollar and was trading at nearly 26.81 pounds per dollar.
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After the elections, Ankara reduced its defense of the Turkish lira, artificially supported for months by massive sales of currencies to prevent it from unscrewing.
The currency lost which has lost a quarter of its value against the dollar since the end of May.
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