This is how the world saw the Central Bank’s interest rate decision
The Central Bank increased the policy rate from 15 percent to 17.5 percent. The rate increase was significantly below market expectations.
Economists had expected the interest rate, which was increased by 650 basis points last month, would rise by 500 basis points today. The decision of the Central Bank to increase interest rates, below expectations, had a wide impact in the international financial press.
In the agency news, insufficient rate hikes were said to have disappointed markets expecting a shock treatment.
The outstanding news on the subject in the foreign press were the following:
BLOOMBERG: CBRT’S JOB WILL BE HARD AS ELECTIONS CLOSE
In news from the US financial agency Bloomberg, “CBRT slowed the pace of interest rate increases and this move exposed local assets to more selling while inflation was still close to 40 percent.”
In the news signed by Beril Akman, it was stated that “economists and investors expected a more aggressive return to Erdoğan’s preferred loose monetary policy.”
The news also said: “The balance will be more difficult as the next local elections arrive in March. Faster economic growth may again become a priority as Erdogan tries to wrest some of the country’s biggest cities from the opposition.
The news also included the research note published by Barclays economist Ercan Ergüzel before the interest rate decision. Ergüzel said: “The authorities may be planning to offset the tightening, which is not ideal on the monetary policy side, with a tighter fiscal policy.”
FT: IT MAY TRIGGER A NEW WAVE OF INFLATION
The Financial Times, for its part, in its story titled “Turkey raised interest rates for the second month in a row to curb inflation,” stated that “The interest rate hike was the latest sign of Erdogan revising his economic policies after his re-election.”
Recalling that Ankara backed down from defending the lira, which severely depletes its foreign reserves, the FT claimed that the danger of inflation in the country remains.
In Adam Samson News, “Economists say the weak lira and tax hikes, which increase the cost of imports, will trigger a new wave of inflation. Bank of America said this week that it expects inflation to reach 65 percent by May 2024.
CNBC: EFFORTS TO FIGHT INFLATION SLOW DOWN
CNBC, on the other hand, noted that the interest rate increase was below expectations, saying: “The new management of Turkey’s economy has taken it upon itself to combat inflation. But efforts have been slow so far,” he said.
In the news signed by Natasha Turak, the opinions of economists were also included. Conotoxia Fintech market analyst Bartosz Sawicki said the decision “marked the second step in abandoning extremely easy monetary policy” but disappointed markets hoping for a cure after a 650 basis point surge in June.
Liam Peach, emerging markets economist at London-based Capital Economics, said: “Top interest rates of 25-30% look possible this year. But now there are clearer risks that the policy change will fall short and the lira will come under further downward pressure. “If monetary tightening remains insufficient, the lira is likely to pay the price,” he said.
WSJ: CONCERNS WILL INCREASE
The US financial agency Wall Street Journal also stated that the interest rate hike disappointed the markets. In Jared Malsin News, “The decision to raise interest rates by just 2.5 points will raise concerns that the new economy team does not have the strength to oppose Erdogan.”
The article claimed that “Erkan’s decision as central bank governor also disappointed some investors and analysts who called for an immediate return to orthodox politics.”
Cagri Kutman, Turkey market specialist at investment bank KNG Securities, said: “These low rate hikes are not helping much because they will fuel the depreciation of the Turkish lira. “They have to do something to break this vicious cycle,” he said.
Britain’s Reuters news agency, on the other hand, said: “The CBRT continued to reverse Erdogan’s low-interest policy and said it would support it with further measures.”