Turkey’s central bank halts a series of interest rate cuts after the currency crisis

Turkey’s central bank kept the interest rate stable at 14% as expected on Thursday, disrupting a series of abrupt and unconventional cuts that led to a currency crisis and pushed inflation to a 19-year high at the end of last year. .

The bank said it will monitor the impact of its previous decisions on monetary policy and expects the “process of lowering inflation” to start early in order to achieve market stability.

He also said he had initiated a “complete overhaul of the monetary policy framework” with the aim of prioritizing the currency and helping inflation reach the target rate.

Under pressure from President Recep Tayyip Erdogan, the central bank launched a series of monetary easing measures in September, cutting the interest rate by 500 basis points to 14%.

And last month, the bank hinted that it will temporarily stop taking further easing measures until it monitors its effects in the first quarter.

The cuts have pushed real yields in extremely negative territory with inflation in acceleration to 36%, causing a crisis that saw the lira lose 44% of its value against the dollar last year. The central bank aims to bring the inflation rate to 5%.

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