Bid to sup­port lira Turkey hikes in­ter­est rates

Arab Times - - BUSINESS -

ANKARA, Turkey, Sept 24, (AP): Turkey’s Cen­tral Bank raised its bench­mark in­ter­est rate by 2 per­cent­age points on Thurs­day, its first hike in two years to fight in­fla­tion and sup­port its fall­ing cur­rency.

In a sur­prise move that helped boost the Turk­ish cur­rency, the Mon­e­tary Pol­icy Com­mit­tee said it had de­cided to in­crease the pol­icy rate from 8.25% to 10.25% “to re­store the dis­in­fla­tion process and sup­port price sta­bil­ity.”

The Turk­ish lira has been plum­met­ing to record lows, dip­ping to 7.7 against the dol­lar this week, as the coro­n­avirus pan­demic con­tin­ues to bat­ter the econ­omy.

The lira has lost some 20% of its value this year.

The Cen­tral Bank had long re­sisted pres­sure to raise the key in­ter­est rate due to pres­sure from Turk­ish Pres­i­dent Re­cep Tayyip Er­do­gan to keep rates low.

Lower in­ter­est rates tend to weaken a cur­rency but boost eco­nomic growth and in­fla­tion.

The Cen­tral Bank had grad­u­ally re­duced the bench­mark rate to 8.25% from as high 24% and had since kept the rates un­changed.

On Thurs­day, the lira was about 1% higher, trad­ing at 7.6 against the dol­lar.

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