Turkish Central Bank surprised on Thursday with a new interest rate increase totally unexpected by economists, increasing its one-week reference rate by 500 basis points to 50% following the latest data on inflation in Turkey, which grew above expectations in February exceeding 67%.
In a statement, the Central Bank of the Turkish Republic (TCMB) confirmed that after a meeting of its Monetary Policy Committee it had been decided to increase interest rates from 45% to 50%, indicating that “the underlying trend of monthly inflation has been higher than expected” in February, and reiterating its commitment to tighten its monetary policy until a significant drop in prices is achieved.
The movement has completely surprised economic experts: in a recent poll conducted by Reuters, 20 of the 22 economists consulted assured that the Turkish Central Bank would not alter its monetary policy in March, while the rest had anticipated an interest rate hike of only 250 points.
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Pablo Gómez is a specialist in Turkey and has been editor-in-chief of Hispanatolia since 2011. He has been analysing current affairs and geopolitics in Turkey and the surrounding region since 2006.
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