عربي English Türkçe اردو فارسى
Logo
Latest News
Business

Turkish Central Bank Keeps its Key Interest Rate Unchanged

A man carries sacks of goods at Eminonu commercial area in Istanbul, Türkiye, Wednesday, Feb. 21, 2024. (AP Photo/Khalil Hamra)
A man carries sacks of goods at Eminonu commercial area in Istanbul, Türkiye, Wednesday, Feb. 21, 2024. (AP Photo/Khalil Hamra)
TT
TT

Turkish Central Bank Keeps its Key Interest Rate Unchanged

A man carries sacks of goods at Eminonu commercial area in Istanbul, Türkiye, Wednesday, Feb. 21, 2024. (AP Photo/Khalil Hamra)
A man carries sacks of goods at Eminonu commercial area in Istanbul, Türkiye, Wednesday, Feb. 21, 2024. (AP Photo/Khalil Hamra)

Türkiye’s central bank left its key interest rate unchanged at 45% on Thursday, pausing a series of aggressive rate hikes aimed at taming high inflation.
The central bank said it was keeping the benchmark one-week repo rate on hold, according to a statement. It was the bank's first interest rate decision under its newly appointed governor, Fatih Karahan.
The move was in line with expectations that the rate would be kept constant after the bank said last month that monetary tightness needed to “establish the disinflation course” was achieved.
On Thursday, the bank suggested the current rate would be maintained until “there is a significant and sustained decline in the underlying trend of monthly inflation,” The Associated Press reported.
President Recep Tayyip Erdogan appointed Karahan as central bank governor on Feb. 3, replacing Hafize Gaye Erkan who resigned after claims of nepotism emerged in local media. Erkan, a former US-based bank executive and Türkiye’s first woman governor, strongly rejected the claims.
Under Erkan's tenure, the central bank had raised the benchmark interest rate from 8.5% in June to 45% last month.
The rate hikes came after Erdogan, who was reelected in May, reversed his unconventional policies that economists say helped trigger a currency crisis and drove up the cost of living, leaving households struggling to afford basic goods.
Despite the series of hikes, inflation remains high — consumer prices rose nearly 65% in January. The Turkish lira, meanwhile, has slumped to a new record low against the dollar this week, going for 31 lira for $1.

Most Viewed

 
 
Business

IMF Sees Steady Global Growth

FILED - 24 October 2024, US, Washington: The logo of the International Monetary Fund (IMF) is seen on the facade of the conference building on Pennsylvania Street. Photo: Soeren Stache/dpa
FILED - 24 October 2024, US, Washington: The logo of the International Monetary Fund (IMF) is seen on the facade of the conference building on Pennsylvania Street. Photo: Soeren Stache/dpa
TT
TT

IMF Sees Steady Global Growth

FILED - 24 October 2024, US, Washington: The logo of the International Monetary Fund (IMF) is seen on the facade of the conference building on Pennsylvania Street. Photo: Soeren Stache/dpa
FILED - 24 October 2024, US, Washington: The logo of the International Monetary Fund (IMF) is seen on the facade of the conference building on Pennsylvania Street. Photo: Soeren Stache/dpa

The International Monetary Fund expects the world economy to grow a little faster and inflation to keep falling this year. But it warned that the outlook is clouded by President-elect Donald Trump’s promises to slash US taxes, impose tariffs on foreign goods, ease regulations on businesses and deport millions of immigrants working illegally in the United States.

The Washington-based lending agency expects the world economy to grow 3.3% this year and next, up from 3.2% in 2024. The growth is steady but unimpressive: From 2000 to 2019, the world economy grew faster – an average of 3.7% a year. The sluggish growth reflects the lingering effects of big global shocks, including the COVID-19 pandemic and Russia's invasion of Ukraine.

The IMF is a 191-nation lending organization that works to promote economic growth and financial stability and to reduce global poverty.

Global inflation, which had surged after the COVID-19 pandemic disrupted global supply chains and caused shortages and higher prices, is forecast to fall from 5.7% in 2024 to 4.2% this year and 3.5% in 2026.

But in a blog post that accompanied the release of the IMF’s latest World Economic Outlook report, the fund’s chief economist, Pierre-Olivier Gourinchas, wrote that the policies Trump has promised to introduce “are likely to push inflation higher in the near term,” The Associated Press reported.

Big tax cuts could overheat the US economy and inflation. Likewise, hefty tariffs on foreign products could at least temporarily push up prices and hurt exporting countries around the world. And mass deportations could cause restaurants, construction companies and other businesses to run short of workers, pushing up their costs and weighing on economic growth.

Gourinchas also wrote that Trump’s plans to slash regulations on business could “boost potential growth in the medium term if they remove red tape and stimulate innovation.’’ But he warned that “excessive deregulation could also weaken financial safeguards and increase financial vulnerabilities, putting the US economy on a dangerous boom-bust path.’’

Trump inherits a strong US economy. The IMF expects US growth to come in at 2.7% this year, a hefty half percentage point upgrade from the 2.2% it had forecast in October.

The American economy — the world's biggest — is proving resilient in the face of high interest rates, engineered by the Federal Reserve to fight inflation. The US is benefiting from a strong job market that gives consumers the confidence and financial wherewithal to keep spending, from strong gains in productivity and from an influx of immigrants that has eased labor shortages.

The US economy’s unexpectedly strong performance stands in sharp contrast to the advanced economies across the Atlantic Ocean. The IMF expects the 20 countries that share the euro currency to collectively grow just 1% this year, up from 0.8% in 2024 but down from the 1.2% it was expecting in October. “Headwinds,” Gourinchas wrote, “include weak momentum, especially in manufacturing, low consumer confidence, and the persistence of a negative energy price shock’’ caused by Russia’s invasion of Ukraine.

The Chinese economy, No. 2 in the world, is forecast to decelerate – from 4.8% last year to 4.6% in 2025 and 4.5% in 2026. A collapse in the Chinese housing market has undermined consumer confidence. If government doesn’t do enough to stimulate the economy with lower interest rates, stepped-up spending or tax cuts, China “is at risk of a debt-deflation stagnation trap,’’ Gourinchas warned, in which falling prices discourage consumers from spending (because they have an incentive to wait to get still better bargains) and make it more expensive for borrowers to repay loans.

The IMF forecasts came out a day after its sister agency, the World Bank, predicted global growth of 2.7% in 2025 and 2026, same as last year and 2023.

The bank, which makes loans and grants to poor countries, warned that the growth wasn’t sufficient to reduce poverty in low-income countries. The IMF’s global growth estimates tend to be higher than the World Bank’s because they give more weight to faster-growing developing countries.