After a stunning rate reductions of 24 to the least of 8.25 per cent within nine months, the Turkish Central Bank buying the most important interest rate for one-week repurchase agreements until Further notice constant. Market observers had previously expected a further reduction in the rate for repo auctions by 0.25 of a point to 8 percent. In the past months, the Executive Board of the Central Bank had exceeded expectations to a reduction in the key interest rate several times. The last summer of state President Recep Tayyip Erdogan used the Central Bank's President, Murat Uysal justified the step with the recovery of the economy, even if the risks due to the Corona pandemic were more high.
Economics correspondent in Vienna.
in the light of the already negative real interest rates, the decision of the guardian of the currency, to be completely rational, was quoted by the Agency Bloomberg, the analysts Piotr Matys of Rabobank in London. The deciding question was, "whether it's cuts to a break or the end of the interest rate". Erdogan wants to boost with low interest rates the domestic consumption, Economists controversial approach.
increase in the core inflation rate
monetary policy and fiscal measures – the Turkey had repeatedly raised taxes on imported goods – contribute to the financial stability and recovery of economic activity, by supporting the production potential of the economy, said the Central Bank. Although revenue from the exports and the low point in recent times, tourism sun declined, however, to expect, at least in the Export of an early normalization, which will help to reduce the deficit in the current account. In addition, we observed an increase in the core rate of inflation, especially in food. In front of the Background you have decided to keep the interest rate constant.
In the currency markets, the Turkish Lira was after a short break-in is largely unchanged in the case of 6.85 Lira per Dollar traded. At the beginning of may, the national currency was quoted at 7,23 Lira to the Dollar as weak as never before. Since then, it has recovered of course. As a reason for interventions by the state are called, the global recovery in the emerging markets, as well as cooperation agreements with other Central banks. The telecommunications informed counter Turk Telekom last week, he had first settled transactions with China in Chinese Yuan. It is based on a Swap agreement, the Turkish with the Chinese Central Bank.
The Turkey is heavily indebted in dollars and euros. According to the Central Bank long-term liabilities of the private sector amounted at the end of April to 173,6 billion dollars, which were $ 7.4 billion less than the end of 2019. Almost two-thirds of which is denominated in dollars, one third in euros. Devaluations of the Lira are reflected directly in higher expenditures for the repayment of interest and debts.Date Of Update: 25 June 2020, 13:19