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Turkish Central Bank Raises Interest Rates to 40%

Turkish Central Bank raised interest rates double the expected. (The central bank’s website)
Turkish Central Bank raised interest rates double the expected. (The central bank’s website)
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Turkish Central Bank Raises Interest Rates to 40%

Turkish Central Bank raised interest rates double the expected. (The central bank’s website)
Turkish Central Bank raised interest rates double the expected. (The central bank’s website)

Türkiye’s central bank raised its policy rate by a larger-than-expected 500 basis points to 40% on Thursday, in an unexpected step.
The central bank is expected to raise its policy rate by 250 basis points to 37.5% this week, and reach 40% by year-end, a Reuters poll showed on Monday.
The bank has raised its one-week repo rate (TRINT=ECI) by 3,150 basis points since June.
The existing level of domestic demand, and geopolitical risks keep inflation pressures alive, the bank said following the Monetary Policy Committee meeting.
The committee will determine policy decisions to create the necessary financial conditions for a sustained decline in the underlying inflation trend, aiming to reach the 5 percent inflation target in the medium term.
The improvement in external financing conditions, continued increase in foreign exchange reserves, positive impact of demand rebalancing on current account balance, and the increase in domestic and foreign demand for Turkish lira-denominated assets contribute significantly to exchange rate stability and the effectiveness of monetary policy.
In light of these developments, a decline in the underlying trend of monthly inflation is observed.
Indicators of inflation and underlying trend of inflation will be closely monitored, and the Committee will continue to decisively use all the tools at its disposal in line with its main objective of price stability.
The Committee will continue to make its decisions in a predictable, data-driven, and transparent framework.
According to the monthly consumer tendency survey released by the Turkish Statistical Institute (TUIK), the consumer confidence index in Türkiye was up by 1.1% month-on-month in November this year to 75.5 points.
Sub-indices for the present financial situation of households increased 2.7% and financial situation expectations of households over the next 12 months gained 2.6%.
The index for general economic situation expectations over the next 12 months went up 0.6% in November from the month prior.
On the other hand, assessments on spending for durable goods over the next 12 months fell 0.6%.

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Saudi Arabia and Italy Boast Trade Volume of Around $10.9 Billion

Saudi and Italian officials meet during Meloni's visit to the Kingdom on Sunday. (SPA)
Saudi and Italian officials meet during Meloni's visit to the Kingdom on Sunday. (SPA)
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Saudi Arabia and Italy Boast Trade Volume of Around $10.9 Billion

Saudi and Italian officials meet during Meloni's visit to the Kingdom on Sunday. (SPA)
Saudi and Italian officials meet during Meloni's visit to the Kingdom on Sunday. (SPA)

Economic affairs were the key focus of Italian Prime Minister Giorgia Meloni’s visit to Saudi Arabia, which began on Saturday and continues until Monday. During her first official trip to the Kingdom, Meloni aims to strengthen bilateral relations and boost trade ties before heading to Bahrain.

As members of the G20, Saudi Arabia and Italy share mutual economic interests. The establishment of the Saudi-Italian Joint Committee has played a pivotal role in advancing economic, trade, and investment relations between the two countries. It has also created effective governance frameworks to foster collaboration and elevate their relationship to the level of a strategic partnership.

Strategic partnerships

Saudi Arabia is Italy’s second-largest trading partner in the region. In 2023, the trade volume between the two countries reached around $10.8 billion. Saudi imports from Italy were valued at $5.875 billion, while exports to Italy amounted to $4.921 billion, including $737 million in non-oil exports. Globally, Italy ranks as the 10th largest exporter to the Kingdom.

Both nations are working to strengthen economic and investment ties by regularly convening the Saudi-Italian Joint Business Council, increasing official and trade delegation visits, encouraging joint ventures, and organizing trade and investment events.

Currently, more than 150 Italian companies operate in Saudi Arabia, with Italy’s foreign direct investment (FDI) stock in the Kingdom exceeding $4.6 billion.

Renewable energy cooperation

Saudi Arabia and Italy are collaborating in the renewable energy sector as the Kingdom focuses on its transition to carbon neutrality. Italy, with its extensive experience in renewable energy technologies, is seeking to establish a long-term partnership with the Kingdom, a potential future leader in green hydrogen production.

In September 2023, the Saudi-Italian Investment Forum, hosted in Milan by Saudi Arabia’s Ministry of Investment in partnership with Italy’s Ministry of Enterprises and Made in Italy, resulted in the signing of 21 agreements and memorandums of understanding. They covered sectors such as traditional and clean energy, healthcare, real estate, waste management, and more.

According to the Italian government, Italy views Saudi Arabia as a key partner, especially regarding investment opportunities tied to the Kingdom’s Vision 2030. The transformative reform plan aims to diversify the Saudi economy, shifting its reliance from oil to a service-based model. It emphasizes tourism, startups, and small- and medium-sized enterprises (SMEs) in high-value-added sectors.

Saudi Arabia ranks sixth globally in terms of the number of visas issued by Italy, underscoring Italy’s position as a leading destination for Saudi tourists.

Italy is also among the top 20 countries investing in Saudi Arabia, with over 150 Italian companies holding foreign investment licenses in the Kingdom. The Saudi-Italian Investment Forum in 2023 further solidified economic ties, with the signing of 21 agreements spanning a wide range of sectors.