{"id":14179,"date":"2023-08-24T12:11:03","date_gmt":"2023-08-24T12:11:03","guid":{"rendered":"https:\/\/isafespend.com\/news\/turkey-surprises-with-bigger-than-expected-interest-rate-hike-to-25-in-bid-to-tame-inflation\/"},"modified":"2023-08-24T12:11:04","modified_gmt":"2023-08-24T12:11:04","slug":"turkey-surprises-with-bigger-than-expected-interest-rate-hike-to-25-in-bid-to-tame-inflation","status":"publish","type":"post","link":"https:\/\/isafespend.com\/?p=14179","title":{"rendered":"Turkey surprises with bigger-than-expected interest rate hike to 25% in bid to tame inflation"},"content":{"rendered":"<div id=\"RegularArticle-ArticleBody-5\" data-module=\"ArticleBody\" data-test=\"articleBody-2\" data-analytics=\"RegularArticle-articleBody-5-2\"><span class=\"HighlightShare-hidden\" style=\"top:0;left:0\"><\/span><\/p>\n<div class=\"group\">\n<p>Turkey&#8217;s central bank on Thursday hiked interest rates by more than expected to 25%, signaling it was willing to follow through on a new commitment to damp inflation through monetary policy.<\/p>\n<p>The main policy rate was previously at 17.5%. Economists polled by Reuters expected a rise to 20%.<\/p>\n<p>In volatile trade after the announcement, the embattled Turkish lira gained ground against the <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"RegularArticle-QuoteInBody-2\">U.S. dollar<span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"><\/span><\/button><\/span><\/span><\/span> and euro. The greenback was roughly 1.6% lower against the lira at 12:47 p.m. London time, and the euro was 1.5% lower against the lira.<\/p>\n<p>In a Thursday statement, the Turkish central bank committee said it &#8220;decided to continue the monetary tightening process in order to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behavior.&#8221;<\/p>\n<p>Ongoing firm inflation rates pushed the central bank to recently revise its inflation forecast for the year-end from 22.3% to 58%. On Thursday, the bank said it expected year-end inflation to sit in the &#8220;upper bound of the forecast range.&#8221;<\/p>\n<p>Inflation has been falling since peaking at 85% in October 2022, but jumped from 38% in June this year to nearly 48% in July. The central bank on Thursday attributed the ongoing stickiness of national inflation to strong domestic demand, wage pressures, exchange rates, persistent services inflation and tax regulations.<\/p>\n<\/div>\n<h2 class=\"ArticleBody-subtitle\">New direction<\/h2>\n<div class=\"group\">\n<p>Turkish President Recep Tayyip Erdogan in June appointed former Wall Street Banker Hafize Gaye Erkan as the new central bank governor, indicating a shift away from the controversial policy of lowering interest rates as inflation soared.<\/p>\n<p>The central bank has since announced rate hikes in June and July, though the move of July fell short of market expectations.<\/p>\n<p>Liam Peach, senior emerging markets economist at Capital Economics, said in a Thursday note that the latest rate move would &#8220;go a long way towards reassuring investors that the shift back to policy orthodoxy is on track.&#8221;<\/p>\n<p>Peach said that uncertainty had been added to the interest rate outlook, and it was now plausible rates could go above 30% in the coming months.<\/p>\n<p>&#8220;As far as Turkey&#8217;s macroeconomic outlook is concerned this could be a game-changer, paving the way for the central bank to take rates to a much higher level and tackle Turkey&#8217;s macro imbalances,&#8221; he said.<\/p>\n<p>&#8220;Whether President Erdogan was on board with this decision is another matter and we simply can&#8217;t rule out Governor Erkan being sacked as a result of this move.&#8221;<\/p>\n<\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.cnbc.com\/2023\/08\/24\/turkish-central-bank-announces-bigger-than-expected-rate-hike-.html\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Turkey&#8217;s central bank on Thursday hiked interest rates by more than expected to 25%, signaling it was willing to follow through on a new commitment to damp inflation through monetary policy. The main policy rate was previously at 17.5%. Economists polled by Reuters expected a rise to 20%. In volatile trade after the announcement, the<\/p>\n","protected":false},"author":1,"featured_media":14180,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[43],"tags":[],"class_list":{"0":"post-14179","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.12 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Turkey surprises with bigger-than-expected interest rate hike to 25% in bid to tame inflation | iSafeSpend<\/title>\n<meta name=\"description\" content=\"Turkey&#039;s central bank on Thursday hiked interest rates by more than expected to 25%, signaling it was willing to follow through on a new commitment to\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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