Markets eye Turkish Central Bank meeting

ISTANBUL

Markets are eagerly eyeing the Turkish Central Bank’s upcoming interest rate decision, slated to be announced on Dec. 20 amid continued pressure on the Turkish Lira with the end of high liquidity in global markets. 

The U.S. dollar surged to a 14-year high against a basket of major currencies last week, on investor anticipation of a more hawkish Federal Reserve and a boost in United States’ economic growth under President-elect Donald Trump.

The dollar index, which measures the greenback against a basket of six major rival currencies, rose to a roughly 14-year high of 103.560, on track for the biggest daily percentage gain in nearly six months.

The Monetary Policy Committee (PPK) of the Turkish Central Bank, which will convene under the leadership of Governor Murat Çetinkaya, is set to hold its last meeting of 2016 on Dec. 20. Many analysts in the market expect that there will be an increase of 50 basis points in the upper band of the interest rate corridor and 25 points in the policy rate. Others, however, believe that the Bank will opt not to make any hike this time. 

The Bank raised its benchmark interest rate by 50 basis points on Nov. 24 in an unexpected move, ordering the first increase in nearly three years, as a skyrocketing U.S. dollar and domestic worries battered the lira.

Defying government officials’ repeated calls for cheaper credit, the Bank increased the one-week repo rate to 8 percent and lifted its overnight lending rate from 8.25 to 8.5 percent.