Shock interest rate cut from Turkish CB despite soaring inflation
Turkey’s Central Bank came up with a surprise decision to decrease its policy rate 100 basis points down to 13 percent on Thursday saying it aims to drive economic growth and sustain employment amid growing geopolitical risk, Reuters reported.
Even as the inflation peaked to 80 percent, the central bank said the cut was necessary because rising loan rates have diminished the effectiveness of monetary policy.
"It is important that financial conditions remain supportive to preserve the growth momentum in industrial production and the positive trend in employment in a period of increasing uncertainties regarding global growth as well as escalating geopolitical risk," the bank's monetary policy committee said in a statement.
“Accordingly, the Committee has decided to reduce the policy rate by 100 basis points, and has assessed that the updated level of policy rate is adequate under the current outlook,” the statement said.
The decision sparked instant reaction on Twitter, as the US dollar spiked over 18 liras for the first time since weeks.
Financial Markets Executive Iris Cibre said that 31 of the 37 central banks this year increased interest rates but only Russia, China and Turkey exercised a rate cut, but inflation in China was 2,7 percent and in Russia was 15 percent.
“This means taking an entire country to the edge of a cliff,” she said.
BİS Datasına göre 37 Merkez bankasından 31'i bu sene faiz artırdı— İris Cibre (@iriscibre) August 18, 2022
Sadece 3ü faiz indirdi
1) Çin, enflasyon oranı 2.7%
2) Rusya, enflasyon oranı 15.1%
3) Türkiye, enflasyon oranı 80%
Yazıklar olsun, bu ülkeyi uçuruma sürüklemektir
“They manage to do worse every month” said Hakan Kara, former chief economist of the central bank.
Her ay bundan da kötüsü olamaz diyorum, ama her ay bir şekilde daha da kötüsünü başarıyorlar????♂️ https://t.co/lQ8gIuj8Yw— Hakan Kara (@ali_hakan_kara) August 18, 2022