The Bank of Turkey raised the country's key interest rate from 15% to 17.5% on Thursday amid a dramatic devaluation of the Turkish currency, the lira, and growing energy prices
ANKARA (Pakistan Point News / Sputnik - 20th July, 2023) The Bank of Turkey raised the country's key interest rate from 15% to 17.5% on Thursday amid a dramatic devaluation of the Turkish currency, the lira, and growing energy prices.
In June, Turkey's central bank said it would continue to gradually tighten monetary policy until the inflation outlook improves significantly. On June 22, it raised its key interest rate for the first time in more than two years, from 8.5% to 15%, although experts had expected a hike to 21%. In early July, the Turkish national currency hit a historic low of 27 liras per US dollar.
"The Monetary Policy Committee of the Bank of Turkey has raised the key interest rate - the one-week auction repo rate - by 250 basis points to 17.5%," the regulator said in a statement.
Some experts said that the Bank of Turkey, which takes the burden off domestic markets by raising interest rates quickly, does not want to put certain segments of society and the business sector in a difficult position, so it would opt for a cautious increase.
Meanwhile, the price of a liter of gasoline and diesel fuel at gas stations in Turkey rose by more than 20% on Sunday, partly due to the authorities' increase in the VAT.� Since the beginning of the year, their price growth has been over 60%.
On Saturday, a liter (0.26 gallons) of gasoline cost about 28 liras ($1.04) at gas stations in major Turkish cities, while on Sunday it cost 34 liras. The price of a liter of diesel fuel rose from 26.3 to 32.3 liras, while at the beginning of the year a liter of gasoline cost about 21 liras and diesel - 23.5 liras. Therefore, the increase in fuel prices exceeded 60%. The price of a liter of liquefied natural gas also increased to 14 liras.
Since July 10, the Turkish authorities have tripled the customs duty on smartphones imported from abroad to $760, while notary services have become one and a half times more expensive and VAT has been raised from 18% to 20%. Taxes on various gambling activities have also been increased.
