Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Interest Rates

News : Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 

Turkey Lifts Rates After Erdogan's Endorsement of Austerity -- Update

11/19/2020 | 06:55am EST

By David Gauthier-Villars

ISTANBUL -- Turkey's central bank sharply raised its benchmark interest rate, pledging to combat inflation less than two weeks after President Recep Tayyip Erdogan reshuffled his economic team and backed a shift in approach to repair an economy beset by a dwindling currency.

Led by newly appointed governor Naci Agbal, the central bank Thursday raised its key, one-week repo rate to 15% from 10.25%, saying it would provide all funding through that facility.

The rate increase came on the heels of a surprise shake-up earlier this month. Mr. Erdogan dismissed Mr. Agbal's predecessor, accepted the resignation of his finance minister and son-in-law, Berat Albayrak, and signaled that he would accept what he had long rejected: austerity.

"We will not abstain from making sacrifices and implementing the correct recipes, even if they are bitter," the president said on Nov. 11.

Mr. Erdogan's about-face and the ensuing rate increase has pushed the lira sharply higher. The Turkish currency, which had lost nearly a third of its value against the U.S. dollar this year, has risen about 12% since the economic leadership reshuffle.

The new approach contrasts with the low-rate policy Mr. Erdogan instructed the central bank to pursue for much of the past 18 months. By keeping its benchmark interest rate routinely below consumer inflation, the central bank discouraged both foreign investors and Turkish people from holding lira and lira-denominated assets, precipitating the currency to a series of all-time lows this fall.

The lira's decline was so abrupt that economists were predicting Turkey would run into a full-scale balance-of-payments crisis unless Mr. Erdogan's administration changed course.

The central bank's policy makers said Thursday they had 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."

Write to David Gauthier-Villars at David.Gauthier-Villars@wsj.com

(END) Dow Jones Newswires

11-19-20 0654ET

Stocks mentioned in the article
ChangeLast1st jan.
US DOLLAR / TURKISH LIRA (USD/TRY) 0.00% 7.4106 Delayed Quote.-0.20%
VILLARS HOLDING S.A. -1.34% 735 Delayed Quote.-5.16%
Latest news "Interest Rates"
06:18aUAE cabinet approves debt strategy to build local currency bond market
RE
06:18aUae cabinet approves public debt strategy that aims to build a market for dirham-denominated bonds - vice president in tweet
RE
01/22U.S. ban on China firms could affect $60 billion of bonds - JPMorgan
RE
01/22Turkey's Erdogan says "absolutely" against high interest rates
RE
01/22Hong Kong money rates drop to multi-year lows on capital inflows
RE
01/21Brazil's Amaggi soybean producer prices $750m green bond -CFO
RE
01/21U.s.-based taxable bond funds attract $10.3 billion, largest inflow in 14 weeks -lipper
RE
01/21Investment-Grade Bonds Stumble on Rising Yields
DJ
01/21South Africa keeps rates flat as inflation risks balanced
RE
01/21Indonesia central bank keeps rates unchanged, vows more support
RE
Latest news "Interest Rates"