Turkish lira dips as central bank hikes rates to 15pc

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Ankara:Turkey’s central bank hikes interest rates for the first time in more than two years, from 8.5pc to 15 percent amid concerns that the move will not be able to curb rising inflation and looming an economic crisis.

The Turkish lira weakened 2.8% to a fresh record low early on Friday, extending losses as the central bank’s large rate hike a day earlier, reversing President Tayyip Erdogan’s policy, fell short of market expectations. The decision marks a partial shift in the policy of the president, Recep Tayyip Erdoğan, under which interest rates have been frozen since March 2021.

Investors say the hike is not enough to curb inflation, and the currency fell 4pc to hit new record lows of 24.55 lira to the dollar.

The central bank’s monetary policy committee said it has raised rates in order to establish the disinflation course, to anchor inflation expectations, and to control the deterioration in pricing behaviour”. Officially, inflation in Turkey is at 39.59%, although unofficial estimates put it at 110%.