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Turkish Central Bank Hikes Rates to Support Currency

Turkish Central Bank Hikes Rates to Support Currency

Thursday, 19 November, 2020 - 20:00
People stand outside an exchange office in landmark Taksim Square, in Istanbul, Monday, Oct. 26, 2020. (AP Photo)

Turkey’s central bank raised its benchmark interest rate on Thursday, in a bid to tame inflation and to prop up the struggling currency.

The bank said it was raising the one-week repo rate by 4.75 percentage points to 15%.

The hike met market expectations for an increase that would help support the lira and contain inflation, Reuters reported.

“The Committee has decided to implement a transparent and strong monetary tightening in order to eliminate risks to the inflation outlook, contain inflation expectations and restore the disinflation process,” the bank said in a statement.

“In the periods ahead, all factors affecting inflation will be taken into account, and the tightness of monetary policy will be decisively sustained until a permanent fall in inflation is achieved,” the statement added.

Turkish President Recep Tayyip Erdoğan ousted the previous central bank chief this month, after the lira hit record lows.

He appointed Naci Agbal, a former finance minister, to the post. Agbal’s appointment was followed by the resignation of Erdogan’s son-in-law and finance minister Berat Albayrak, who was later replaced by Lutfi Elvan, a former deputy prime minister.

Annual inflation stands at around 12% and unemployment at around 13% although opposition parties and economists caution that the official figures do not represent the full picture.

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