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Turkey’s largest bank abandons interest rates | Business and Economic Affairs

Turkey’s central bank has abandoned its fixed interest rate on Wednesday because accelerating inflation and the weakening lira leave little chance of receiving the minimum wage President Recep Tayyip Erdogan wants.

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Turkey’s central bank kept its interest rate unchanged for the fourth month on Wednesday, as rising prices and the weakening of the lira undermine the economic recovery of the epidemic.

The Monetary Policy Committee has had a one-week interest rate of 19% as predicted by all 21 experts surveyed by Bloomberg. Turkey’s economic downturn accelerated faster than in June due to rising global prices and declining coronavirus restrictions, which leave room for a reduction in the borrowing demands President Recep Tayyip Erdogan seeks in July or August.

The central bank said it would continue to keep pace with the sharp rise in inflation, and warned of “possible disruptions” in the summer economy as the economy recovers.

“The current account is expected to send the surplus over the next year due to strong exports, as well as strong advances in the immunization program that promotes tourism,” the bank said in a statement following a statement.

With the threat of rising inflation expected until July, a separate study of 14 experts indicated that they expect a reduction in interest rates in the last three months of 2021. Four said the central bank would begin to cut spending in the third quarter.

Morgan Stanley analysts including Alina Slyusarchuk predicted a decline of 100 in September, “when there are tourism-related events supporting the FX market.” But if inflation continues to rise, there could be a 50-point reduction, or the cut could be moved to the fourth quarter, he said in an email before reaching the bank.

The lira has weakened by more than 15% against the dollar since the inception of Sahap Kavcioglu bank governor in March, although he has promised to have the opportunity to achieve economic reforms and remain firm until the bank’s 5% rise is achieved. The amount was not changed after the election. It was trading 0.3% strong at 8.5993 per dollar at 3:07 pm at the same time.

Istanbul economist Haluk Burumcekci expects economists to increase inflation by the end of the year by 2% at the next inflation Report. “The central bank has no place to run and the only thing left is to reduce the prospect of a downturn,” he said.

A central bank survey in July showed market participants expect that inflation would end at 15.6% year-on-year, up from 12.2%. Financial officials will also monitor pricing trends throughout 2021 and the next two years on July 29. Details of the July inflation will be released on August 3.

(Amendments and actions to the lira in paragraph 7, commenter on eight.)




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