Turkey central bank hikes rates to 24%

DXY Index Sideways Grind Continues ahead of BOE ECB Tomorrow

However, the property and construction market has become a concern for investors anxious that Turkish companies that borrowed heavily to profit from a boom may struggle to repay loans in foreign currencies, as the weakened lira means there is now more to pay back.

All 11 economists in a Reuters poll had forecast the bank would tighten, with the predictions ranging between 225-725 basis points as it balances concerns over the lira's weakness with worries about a sharp economic slowdown.

It said: "Accordingly, the committee has made a decision to implement a strong monetary tightening to support price stability".

As well as being seen to undermine the independence of the central bank, Erdogan in July stunned markets by appointing his son-in-law Berat Albayrak as finance minister.

"Deterioration in the pricing behaviour continues to pose upside risks on the inflation outlook, despite weaker domestic demand conditions", the bank added.

The move comes as Turkey's currency has lost nearly a third of its value against the dollar since January.

The Central Bank of the Republic of Turkey (CBRT) raised the rate from 17.75% to 24%, significantly higher than the analysts' consensus of 21%, and in apparent defiance of the president, who has regularly expressed resistance to raising rates.

The main share index rose 2.1 percent, with the banking index up 4.8 percent.

Key rates are now at their highest level since 2004, around a year after Erdogan first came to power. Erdoğan has always been pressuring the bank to keep interest rates low to encourage economic growth.

Mac Miller Reportedly Dead For Hours Before Body Was Found
Mac Miller was reportedly dead for hours before his body was discovered in his Los Angeles bedroom and paramedics were called. Toxicology reports that will yield more insight into Miller's death are expected to be returned in four to six weeks.

The bank had not touched interest rates since early June with markets concerned that the policy of the nominally independent bank is being dictated by Erdogan.

"Obviously, it will have negative consequences on the economy but, I would say, it is less important if you have a hard landing than big corporate defaults due to a vicious cycle between (lira) depreciation and inflation", he said.

Phoenix Kalen, director of EM strategy at Societe Generale, said the market was both pleased and confused by the bank move.

There had been indications from Turkey's central bank that it would raise rates, after inflation came in at almost 18% in August, according to official data.

Neil Wilson, chief market analyst at Markets.com said: "This was a definite statement from policymakers, but the risk now is that the market tries to test the central bank's resolve: the horse may have already bolted".

That decision sent the lira tumbling by a quarter and prompted Turkish authorities to impose a series of measures meant to support the currency.

Mr Erdogan has previously urged Turks to sell their dollars and euros.

In a bid to shore up the Turkish lira, Erdoğan's government issued a decree on Thursday banning the use of foreign currency in the sale and renting of property and the leasing of vehicles.

Related News:

  • Sphero launches Bolt, its new robotic ball with programmable LED lights

    Sphero launches Bolt, its new robotic ball with programmable LED lights

    The Edu app is the real heart of the Bolt, including everything you need to code your own mini-programs using the device. Paired with a powerful coding app, it looks set to be a great way to get kids interested in coding.
    3 students shot near Chatham high school

    3 students shot near Chatham high school

    Chatham Academy High School , a Chicago Public School, is located in the same block. He was taken in critical condition to the University of Chicago Medical Center.
    Trump Blames ‘Inaccessible’ Puerto Rico for Hurricane Deaths of 2975 - Internet Explodes

    Trump Blames ‘Inaccessible’ Puerto Rico for Hurricane Deaths of 2975 - Internet Explodes

    A large rain cloud passes over a day before the arrival of hurricane Florence in Wilmington, N.C. on September 12, 2018 . Trump said Tuesday , "I think Puerto Rico was incredibly successful".
  • Juventus' Paulo Dybala: Cristiano Ronaldo and I working 'brilliantly' together

    Juventus' Paulo Dybala: Cristiano Ronaldo and I working 'brilliantly' together

    Dybala came on as a second-half substitute in Argentina's 0-0 draw with Colombia last night. Dybala joined moved to Turin in 2015, completing a £28m move from Palermo .
    Google Pixelbook 2 teased online ahead of October 9 event

    Google Pixelbook 2 teased online ahead of October 9 event

    Next is Facebook ad that seemingly shows a Pixelbook more like the one Google released previous year (codenamed Atlas). The reader said that when he clicked on the ad, it took him to the Pixelbook page of the Google Store.
    Tottenham fans will love Toby Alderweireld's latest comments

    Tottenham fans will love Toby Alderweireld's latest comments

    Opinion from Spurs fans is split, with some happy at his comments and others reserving judgement until he signs a new deal. The Manchester Evening News reported Alderweireld was valued at £55 million by Tottenham .
  • Battery power grows in Apple iPhone XS and XS Max

    The front camera is the same as the iPhone XS with a 7MP f/2.2 TrueDepth camera that also supports Portrait Mode and Animoji. Thanks to the larger display , there's a new watch face that features up to eight complications that can be customized.

    Turkey central bank stuns markets with huge rate hike

    Turkish President Tayyip Erdogan makes a speech during a meeting in Ankara, Turkey September 13, 2018. Rising U.S. interest rates have discouraged the riskier reach for yield, deepening home-grown crises.

    United States threatens ban to fight teenage vaping epidemic

    It was "the largest coordinated enforcement effort in the FDA's history", according to the agency. But Gottlieb said the easy availability of e-cigarettes is hitting teens.
  • Study Makes the Case for Pluto as a Planet

    Study Makes the Case for Pluto as a Planet

    He added: "It's more dynamic and alive than Mars". "The only planet that has more complex geology is the Earth". The IAU told Fox News that it has not yet received a formal proposal to change its definition of a planet .
    Massive OnePlus 6T Leak: Spces, Price and More

    Massive OnePlus 6T Leak: Spces, Price and More

    Also the phone will feature a vertically stacked triple rear configuration, that will be seen above the OnePlus logo. OnePlus is working on its upcoming OnePlus 6T smartphone which is expected to launch next month on October 17.
    Man arrested in Saudi Arabia over

    Man arrested in Saudi Arabia over "offensive" meal with a woman

    Women are exempted from carrying out most outside activities without being accompanied by a man, father, husband, brother or son. The latest case in point is a viral video which shows an Egyptian man having breakfast with a female colleague in his office.


Most liked

RIP iPhone: Apple discontinues its flagships
Assuming you get one of the models, you'll also be able to pick up a matching pair of Beats starting this fall season. However, official confirmation is yet to be received from Apple on this matter.

Mobile inks $3.5 billion deal with Ericsson for 5G equipment
As part the Nokia agreement, T-Mobile said it would use Nokia's 5G network technology including software, services and hardware. Ericsson said its products would function across all of the spectrum bands that T-Mobile has at its disposal.

Japan Wants An End To The Whaling Ban
The commission banned commercial whaling in the 1980s, but Japan is proposing to reinstitute it with catch limits. Under its scientific whaling programme, Japanese fishermen harpooned 333 Minke whales this year.

Author of ‘How to Murder Your Husband’ Charged With Murdering Her Husband
In the blog post, Crampton-Brophy gives the pros and cons of particular motives and methods for getting away with murder. His answer convinced me he was Mr Right. "I don't want to worry about blood and brains splattered on my walls.

New York's big Thursday gubernatorial primary pits Andrew Cuomo against Cynthia Nixon
Kathy Hochul, is facing a serious primary challenge from progressive New York City Councilman Jumaane Williams. Several big Democratic names passed on mounting a primary challenge to the governor before Nixon stepped in.

'Diablo III' Invades 'Overwatch' With New Exclusive Sombra Skin
With Blizzard having always been a titan of the gaming industry, the BlizzCon is one of the biggest conventions in the calendar. Fans who do not purchase the BlizzCon Virtual Ticket can tune in to the opening ceremony and live esports streams for free.

'Middle-aged drinkers in United Kingdom should have alcohol free days'
This new partnership between Public Health England and Drinkaware is a fresh and bold step in our work to reduce alcohol harm. Drinkaware chief executive Elaine Hindal said: "The more you drink, the greater the risk to your health".

Aston Martin is working on a 155mph electric auto to topple Tesla
Aston Martin is accepting expressions of interest via its global dealership network, with pricing available on application. In terms of the design, the Rapide E has some extra aerodynamic tricks, previewed by its specially designed wheels.

Pope accepts resignation of U.S. bishop accused of sexual harassment
He said the devil "tries to uncover the sins, so they are visible in order to scandalize the people". McFadden said he did not know when the meeting would occur.

China vows to respond if US takes new steps on trade
Washington, Europe and other trading partners argue those plans violate Beijing's market-opening pledges. Earlier on, Beijing said that it will put steep duties on USD$60 billion worth of U.S. imports.

Salisbury attack: We were just visiting the cathedral, say novichok suspects
The two men described themselves workers in the fitness industry and said that they had been on a sightseeing trip to... Boshirov acknowledged they may have been near Mr Skripal's house but they did not know where it was.

Carlos Tevez highlights difference between Lionel Messi and Cristiano Ronaldo
So far, players 100-11 have been made public, with some of the top footballers in the world seeing their names pop up on the list. Gamers don't have to wait long to get a taste of this year's edition.

Liverpool need Bayern's mentality to win titles - Shaqiri
Liverpool's League Cup triumph in 2012 remains their most recent trophy of any kind. Good games over the next few weeks and of course I am looking forward to them.

Prehistoric 'hashtag' may be world's oldest drawing
Scientists have found a tiny fragment of rock marked with intersecting lines of red ocher pigment some 73,000 years ago. So the drawing on the Blombos silcrete flake is the oldest drawing by Homo sapiens ever found.

Paulina Gretzky and Dustin Johnson, Alleged Mistress Denies Affair
In recent days, Gretzky - a frequent flier at PGA tourneys - has been missing from Johnson's side. Gretzky, 29, still follows the golf star, and it is unclear what prompted the puzzling move.