After the Swiss National Bank’s surprise rate cuts on Thursday, Turkey is providing the markets with yet another rate-related surprise.
According to Euronews, the Central Bank of Turkey said on Thursday that it had raised the policy rate from 45% to 50%.
This increase is due to February's runaway inflation, which came in higher than expected, having skyrocketed to 67% and is continuing towards 70%.
In a press release, the Turkish central bank stated,
“Tight monetary stance will be maintained until a significant and sustained decline in the underlying trend of monthly inflation is observed, and inflation expectations converge to the projected forecast range. Monetary policy stance will be tightened in case a significant and persistent deterioration in inflation is foreseen. The decisiveness regarding tight monetary stance will bring down the underlying trend of monthly inflation through moderation in domestic demand, real appreciation in Turkish lira, and improvement in inflation expectations. Consequently, disinflation will be established in the second half of 2024.”