The Central Bank of Turkey Increases Interest Rate to 40% by 500 Basis Points

Central Bank of Turkey Surprises Economists with 500 Basis Point Interest Rate Hike

In a surprising move, Turkey’s central bank increased its key interest rate, the benchmark one-week repo rate, by 500 basis points to 40% on Thursday. This decision doubled economists’ expectations, as they had only forecast a 250-basis-point hike.

The move is seen as part of the central bank’s effort to combat high inflation and a falling Turkish lira, which experienced inflation of 61% in October. Following the news, the lira was trading at 28.766 to the dollar, slightly higher against the greenback.

Timothy Ash, an emerging markets strategist at BlueBay Asset Management, was one of the few experts who anticipated the 500-basis-point hike. He described the central bank’s move as “really impressive” and commended them for their determination to fight inflation.

The decision to increase interest rates follows a series of hikes that have been painful for Turks, as the country seeks to address years of skyrocketing inflation and a weakened currency. This is largely attributed to loose monetary policy by the Ankara government.

This is a breaking news story, and updates will be provided shortly.