Turkey's Central Bank may raise the interest rate for the first time in 27 months, Turkish newspaper Dünya reported on Thursday
ANKARA (Pakistan Point News / Sputnik - 22nd June, 2023) Turkey's Central Bank may raise the interest rate for the first time in 27 months, Turkish newspaper Dünya reported on Thursday.
The Central Bank will announce its first decision on the interest rate since the appointment of Hafize Gaye Erkan as its head today at 11:00 GMT, according to the report. Experts believe that the Central Bank will raise its interest rate for the first time since March 2021, from 8.5% to at least 20% in order to give confidence to economic management amid the high inflation.
However, analysts provide different assessment of the size of the raise, the newspaper reported.
A poll by AA Finans's MPC Interest said the Central Bank can increase the interest rate by 12%-30%. The median forecast was 19.25%, according to the report. The Review of Market Expectations by the Central Bank itself said the expectation stands at 17.5%.
Opinions of foreign institutions also vary, the news outlet reported. Bank of America Securities said it expects the Central Bank to raise its rate to 25%, but it could also go for a surprise reduction. Goldman Sachs expects the Turkish regulator to increase the interest rate up to 40%. JPMorgan and Deutsche Bank forecasted a 20% and 25% raise.
This comes less than a month after Turkish President Recep Tayyip Erdogan's re-election.
In recent years, Erdogan has pursued a policy of keeping the interest rate low, which exacerbated the Turkish economic crisis. The Turkish currency has lost more than 80% of its value in the past five years, and 44% of its value in 2021 alone, while inflation is almost 40% at the moment.
On June 14, Erdogan urged the market not to be mistaken about the possibility of changing his policy on the interest rate and noted that he believes in the success of the "low interest, low inflation" theory.
