Turkish Central Bank sharply hikes key rate, helps lira gain value
The bank said there was still an upside risk to the inflation outlook from what it called a deterioration in pricing behavior, despite weaker domestic demand conditions.
“Accordingly, the Committee has decided to implement a strong monetary tightening to support price stability,” it said in a statement.
“Inflation expectations, pricing behavior, lagged impact of recent monetary policy decisions, contribution of fiscal policy to rebalancing process, and other factors affecting inflation will be closely monitored and, if needed, further monetary tightening will be delivered,” it added.
The lira steeply gained ground against the United States dollar and the euro after the rate decision, hitting the lowest level in two weeks with 6.01 and 7.01, respectively. It later eased to 6.16 against the greenback and 7.22 against the euro.
Official figures on Sept. 3 showed Turkey’s annual inflation was 17.9 percent in August, up from July’s figure of 15.85 percent.
“Accordingly, in line with the previous communication, monetary stance will be adjusted at the September Monetary Policy Committee Meeting in view of the latest developments,” it then said.
Funding on weekly basis
“A one-week transition period has been envisaged for providing all of the funding via one-week auctions,” it said on Sept. 13, adding that technical details would be announced.