Turkish Central Bank committee to meet for key rate decision

ANKARA

REUTERS photo

The Central Bank’s Monetary Policy Committee (PPK) is set to meet on Jan. 24 to make a key decision on raising, holding or lowering interest rates, after recent sharp losses in the value of the Turkish Lira. 

The Bank is likely to increase the upper limit of the interest rates corridor by at least 25 basis points, according to a panel of economists surveyed by state-run Anadolu Agency last week.      

Speaking one day before the meeting, Turkish government spokesman and Deputy Prime Minister Numan Kurtulmuş tried to affirm the independence of the Central Bank, despite long-running pressure from the government and President Recep Tayyip Erdoğan against raising interest rates.

Erdoğan is known to be against high rates, which he believes are pushed by an “interest rate lobby” aiming to damage the Turkish economy.  

Asked at a news conference in Ankara about the rate decision, Kurtulmuş said the Central Bank “had its own policy and is an independent institution.” 

The Bank refrained from holding a one-week repo auction for the eighth time in a row during the first day of trading on Jan. 23.

It skipped the auction – in which local banks borrow Turkish Liras from the Central Bank – for the eighth trading day as the Bank acted to stem a sharp decline in the value of the local currency, especially against the U.S. dollar.

A repo auction has not been held since Jan. 12. 

The Bank has signaled that it will continue to skip the practice until volatility in foreign exchange rates calms down.       

Meanwhile, credit rating agency Fitch’s review on Turkey is expected to be published on Jan. 27.