Central Bank of Turkey cuts key rate to 12%
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The Central Bank of Turkey (CBRT) cut its key rate by 100 basis points to 12%. The decision was made against the backdrop of a slowdown in global economic activity. After the decision of the regulator, the Turkish lira fell against the dollar by 0.3% – 18.4 lira to $1. Last time CB lowered key rate on 18 August.
“The dampening effect of geopolitical risks on economic activity around the world continues to intensify. Forecasts for global growth for the coming period continue to be updated downwards, and assessments that a recession is an imminent risk factor are gaining ground,” the website says. CBRT. The Turkish regulator notes that due to rising energy prices and a mismatch between supply and demand, inflation will continue to rise longer than expected.
In August, the head of the insurance company Allianz and Barclays, Mohammed El-Erian, said that Turkey “ignores the fundamental laws of the economy.” Since 2021, Turkish President Recep Tayyip Erdogan has fired three heads of the CBRT for raising interest rates. According to him, in order to reduce inflation, it is necessary to reduce the key rate. In August, inflation in the country amounted to 80.21%.
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