Central Bank interest rate decision announced: New interest rate fixed as 13 percent

The Central Bank cut its policy interest rate by 100 basis points to 13 percent with a surprise decision it took at its meeting today.

The Central Bank’s (CBRT) Monetary Policy Committee (PPK) has announced its interest rate decision. The Board cut the policy interest rate by 100 basis points to 13 percent. In the surveys conducted before the decision, the expectation of economists was that the CBRT would keep the interest rate constant.

With the decision contrary to expectations, the daily increase in dollar / TL approached the level of 1 percent, while the exchange rate exceeded the level of 18.10. Euro / TL saw above the level of 18.45. Gram gold traded at 1030 TL with an increase of 1.3 percent.

LAST YEAR’S DISCOUNTS HAD SENT THE CURRENCY AND INFLATION SKYROCKETING

The Bank, on the instructions of President Recep Tayyip Erdogan, had reduced the interest rate from 19 percent to 14 percent in September / December period and the dollar exchange rate had sky-rocketed from 8.30 to 18 levels with the official consumer inflation jumping from 19 percent to 80 percent as a result of said decisions. No interest rate reduction decision had been taken at the 8 meeting held since December. Thus, at this meeting, it was seen that the discount decision was made again after 8 months.

Editor’s note: Selçuk Geçer, an expert economist has said US dollar could see 20 TL by end of September. The economist also said as it stands today, 54.50 percent of total deposits in banks are held in foreign currency accounts and only 14.5 percent are held in Currency Protected Deposit accounts (which has brought an immnese burden on Turkey’s budget).