Econ­o­mists di­vided on pos­si­ble Turk­ish rate hike

Kuwait Times - - BUSINESS -

Econ­o­mists are di­vided on whether Turkey’s cen­tral bank will hike its main in­ter­est rate for the first time in al­most three years next week, a Reuters poll showed on Fri­day, af­ter falls in the lira cur­rency to a series of record lows. Sources in Prime Min­is­ter Bi­nali Yildirim’s of­fice said the cen­tral bank had agreed it would “take the nec­es­sary steps” to en­sure price sta­bil­ity at a meet­ing of top econ­omy of­fi­cials on Fri­day, but were oth­er­wise tight-lipped on its pol­icy stance.

Six of 13 in­sti­tu­tions in the poll ex­pect the bank to hike its main one­week repo rate by 25 ba­sis points to 7.75 per­cent next Thurs­day. That would be the first hike since the end of Jan­uary 2014, when the bank met in emer­gency ses­sion and raised its main in­ter­est rate to 10 per­cent to stem sharp lira falls. The lira hit a new record low of 3.4 to the US dol­lar ear­lier on Fri­day. Other emerg­ing mar­ket as­sets also suf­fered af­ter Fed­eral Re­serve chief Janet Yellen sig­nalled a US rate hike was on track.

The lira has been hit by global volatil­ity in the wake of Don­ald Trump’s US elec­tion vic­tory, and by con­cerns about do­mes­tic Turk­ish politics af­ter July’s failed coup. “Our peo­ple should re­main calm, the Turk­ish econ­omy’s foun­da­tion is strong,” Yildirim told re­porters in the cap­i­tal Ankara, be­fore the “eco­nomic co­or­di­na­tion com­mit­tee” meet­ing. The meet­ing at­tended by Yildirim, the cen­tral bank gov­er­nor and other se­nior mem­bers of the cabi­net in­clud­ing Deputy Prime Min­is­ter Mehmet Sim­sek and Fi­nance Min­is­ter Naci Ag­bal, con­cluded that re­cent mar­ket ac­tiv­ity had largely been driven by global de­vel­op­ments, the sources said.

They said min­is­ters agreed that gov­ern­ment re­forms to strengthen eco­nomic sta­bil­ity should be ac­cel­er­ated to limit the im­pact on the lo­cal econ­omy, and that the cen­tral bank would con­tinue to mon­i­tor de­vel­op­ments closely. “(The bank) will take nec­es­sary mea­sures in line with the tar­get of price sta­bil­ity,” one of the sources in the prime min­is­ter’s of­fice said.

Oyak Se­cu­ri­ties chief econ­o­mist Mehmet Bes­i­moglu said the prob­a­bil­ity of the cen­tral bank tak­ing a step on in­ter­est rates next week ap­peared to have in­creased af­ter the meet­ing. All 13 econ­o­mists in the Reuters poll ex­pect the bank to leave the up­per and lower end of its rate cor­ri­dor un­changed, with the overnight lend­ing rate re­main­ing at 8.25 per­cent and the overnight bor­row­ing rate at 7.25 per­cent. — Reuters

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.