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Turkey: Central bank resists Erdogan’s calls for rate cut

August 16, 2021 at 2:19 pm

Turkish lira, 7 August 2018 [Twitter]

Turkey’s central bank (CBRT) held its benchmark interest rate, defying President Recep Tayyip Erdogan’s calls for a cut, Al Jazeera reports.

The Turkish lira rallied to lead gains among its emerging-market peers following the news. Bloomberg reported that the currency rose as much as 1.2 per cent after the Monetary Policy Committee held its one-week repo rate at 19 per cent for a fifth month as forecast.

The decision of CBRT appeased traders and investors who were concerned that the policymaker would succumb to political pressure and lower borrowing costs despite the deteriorating outlook for inflation.

With the announcement, the benchmark rate will continue to be determined at a level above inflation, the central bank said.

The lira has depreciated around 16 per cent since Turkey’s new central bank chief Sahap Kavcioglu was appointmented in March.

READ: Turkey discovers new $1.2bn gold reserves