Saturday, June 21, 2025
  • Login
Euro Times
No Result
View All Result
  • Home
  • Finance
  • Business
  • World
  • Politics
  • Markets
  • Stock Market
  • Cryptocurrency
  • Investing
  • Health
  • Technology
  • Home
  • Finance
  • Business
  • World
  • Politics
  • Markets
  • Stock Market
  • Cryptocurrency
  • Investing
  • Health
  • Technology
Euro Times
No Result
View All Result

Turkish cenbank stuns markets again with 100 basis-point rate cut, lira hits new low By Reuters

by Reuters
September 22, 2022
in Business
Reading Time: 3 mins read
A A
0
Home Business
Share on FacebookShare on Twitter


© Reuters. FILE PHOTO: A logo of Turkey’s Central Bank (TCMB) is pictured at the entrance of the bank’s headquarters in Ankara, Turkey April 19, 2015. REUTERS/Umit Bektas

By Ali Kucukgocmen and Ezgi Erkoyun

ISTANBUL (Reuters) – Turkey’s central bank delivered another surprise 100 basis-point rate cut on Thursday, sending the lira tumbling to an all-time low, even as inflation rose above 80% and as central banks globally race in the opposite direction and tighten policy.

touched a record 18.42 versus the dollar, surpassing the level reached during a full-blown currency crisis last December. It edged back to 18.37 by 1223 GMT.

Analysts called the monetary easing unsustainable and driven by President Tayyip Erdogan’s effort to lower borrowing costs to stoke exports and investment, and they predicted more currency depreciation ahead. [L8N30T3FS]

Unorthodox rate cuts over the last year, along with rising commodity prices, have sent inflation to a 24-year high and sparked a cost-of-living crisis for Turks.

The central bank justified the move by citing continued indications of an economic slowdown, and it repeated that it expected disinflation, or a deceleration in the inflation rate, to set in.

“Leading indicators for the third quarter continue pointing to loss of momentum in economic activity due to the decreasing foreign demand,” its policy committee said.

“It is important that financial conditions remain supportive to preserve the growth momentum in industrial production and the positive trend in employment,” it said, pointing to increasing uncertainties in global growth and escalating geopolitical risk.

GRAPHIC – A widening gap A widening gap

https://graphics.reuters.com/TURKEY-CENBANK/RATES/zgvombzaxvd/chart.png

The rate cuts go against a global tightening cycle that saw the U.S. Federal Reserve hike its benchmark overnight interest rate by 75 basis points on Wednesday to a range of 3.00%-3.25%. The European Central Bank also raised its key rates by 75 basis points this month.

NEGATIVE YIELDS, WEAKENING LIRA

Eleven of 14 economists in a Reuters poll forecast rates would be kept on hold. One had predicted a 50 basis-point cut to 12.50%, while two forecast a 100 basis-point cut to 12%.

Liam Peach, senior emerging markets economist at Capital Economics, said that the “window for easing remains open” but that further cuts would likely be more gradual.

“The macro backdrop in Turkey remains poor. Real interest rates are deeply negative, the current account deficit is widening and short-term external debts remain large,” he said.

“It may not take a significant tightening of global financial conditions for investor risk sentiment towards Turkey to sour and add more downward pressure on the lira,” Peach added.

Last month, in a previous shock to market expectations, the bank slashed its key one-week repo rate by 100 basis points to 13% to head off a cooling economy. It had left the rate steady the previous seven months.

In the latter part of last year it lowered the rate by 500 basis points in line with an unorthodox policy advocated by Erdogan, leaving real rates deeply negative, which is a red flag for investors.

Turkey’s lira has halved in value in the last year largely due to the policy of cutting rates despite soaring prices.

GRAPHIC – Turkish lira timeline September 2022

https://fingfx.thomsonreuters.com/gfx/mkt/lbpgnkkmlvq/Turkish%20lira%20timeline%20September%202022.PNG

Each rate cut weighs more on country risks and the lira, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

“As an economist, it is hard to comment on this decision, because normally, higher inflation requires higher interest rates,” she said. “The freestyle monetary policy management costs, and is certainly not sustainable.”

Erdogan has prioritised exports, production and investments under an economic programme aiming to lower inflation by flipping chronic current account deficits to a surplus.

That target is all but unattainable this year due to the surge in energy prices and a global economic slowdown that is likely to hit Turkey’s exports.

Since last month’s cut, the central bank has taken steps that are meant to address the widening gap between the bank’s policy rate and lending rates, sowing confusion for lenders and borrowers alike.



Source link

Tags: BasisPointcenbankcuthitsliraMarketsrateReutersstunsTurkish
Previous Post

Slowing Investments Into Fulfilment Services Will Fuel Amazon’s Profit Beats

Next Post

Watch Live: U.N. Security Council Meets on Ukraine

Related Posts

Houthis threaten US warships in Red Sea if Trump backs Israel against Iran

Houthis threaten US warships in Red Sea if Trump backs Israel against Iran

by Euro Times
June 21, 2025
0

 The menace escalates tensions within the broader Center East as President Donald Trump continues to weigh a doable U.S. entry...

FATF Report Links Dual-Use Equipment Seized By India In 2020 To Pak’s Defence Agency

FATF Report Links Dual-Use Equipment Seized By India In 2020 To Pak’s Defence Agency

by PTI
June 21, 2025
0

A dual-use tools seized by India from a Pakistan-bound service provider vessel in 2020 is linked to Islamabad's Nationwide Improvement...

Belarus opposition leader Tikhanovsky freed from jail

Belarus opposition leader Tikhanovsky freed from jail

by Euro Times
June 21, 2025
0

One of many leaders of Belarus's opposition motion, Sergei Tikhanovsky, has been launched from jail in Belarus after being pardoned,...

Biocon Closes Rs 4,500-Crore QIP At 6% Discount To Last Closing

Biocon Closes Rs 4,500-Crore QIP At 6% Discount To Last Closing

by NDTV Profit Desk
June 20, 2025
0

Pharmaceutical main Biocon Ltd. accomplished elevating of Rs 4,500 crore by means of certified institutional placement, reported the corporate on...

Ashish Kacholia Portfolio: NIIT Learning Systems, Stove Kraft hit 52-week lows—time to buy the dip or sell?

Ashish Kacholia Portfolio: NIIT Learning Systems, Stove Kraft hit 52-week lows—time to buy the dip or sell?

by zee business
June 21, 2025
0

Ashish Kacholia Portfolio: Prime investor Ashish Kacholia, additionally recognized because the "Massive Whale" of Indian equities, has constructed his popularity by...

Nippon India MF, BlackRock, Societe Generale, others buy 10% stake in Sai Life for ₹1,505 cr

Nippon India MF, BlackRock, Societe Generale, others buy 10% stake in Sai Life for ₹1,505 cr

by Euro Times
June 20, 2025
0

Nippon India Mutual Fund, BlackRock, Societe Generale, Morgan Stanley and others on Friday collectively purchased a ten per cent stake...

Next Post
Watch Live: U.N. Security Council Meets on Ukraine

Watch Live: U.N. Security Council Meets on Ukraine

Pros and Cons of Curated Content in Financial Services

Pros and Cons of Curated Content in Financial Services

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Texas governor signs Bitcoin reserve bill into law

Texas governor signs Bitcoin reserve bill into law

June 21, 2025
Hogs Higher Going Into Weekend, With Some New Life of Contract Highs

Hogs Higher Going Into Weekend, With Some New Life of Contract Highs

June 21, 2025
French Crypto User Assaulted Over Ledger Wallet In Shocking Attack

French Crypto User Assaulted Over Ledger Wallet In Shocking Attack

June 21, 2025
Texas DPS Arrest Human Smugglers During Traffic Stop, Driver Denying Search, Find Two Illegals in Trunk with Help from Border Patrol K9 Search (VIDEO) | The Gateway Pundit

Texas DPS Arrest Human Smugglers During Traffic Stop, Driver Denying Search, Find Two Illegals in Trunk with Help from Border Patrol K9 Search (VIDEO) | The Gateway Pundit

June 21, 2025
Houthis threaten US warships in Red Sea if Trump backs Israel against Iran

Houthis threaten US warships in Red Sea if Trump backs Israel against Iran

June 21, 2025
FATF Report Links Dual-Use Equipment Seized By India In 2020 To Pak’s Defence Agency

FATF Report Links Dual-Use Equipment Seized By India In 2020 To Pak’s Defence Agency

June 21, 2025
Euro Times

Get the latest news and follow the coverage of Business & Financial News, Stock Market Updates, Analysis, and more from the trusted sources.

CATEGORIES

  • Business
  • Cryptocurrency
  • Finance
  • Health
  • Investing
  • Markets
  • Politics
  • Stock Market
  • Technology
  • Uncategorized
  • World

LATEST UPDATES

Texas governor signs Bitcoin reserve bill into law

Hogs Higher Going Into Weekend, With Some New Life of Contract Highs

  • Disclaimer
  • Privacy Policy
  • DMCA
  • Cookie Privacy Policy
  • Terms and Conditions
  • Contact us

Copyright © 2022 - Euro Times.
Euro Times is not responsible for the content of external sites.

No Result
View All Result
  • Home
  • Finance
  • Business
  • World
  • Politics
  • Markets
  • Stock Market
  • Cryptocurrency
  • Investing
  • Health
  • Technology

Copyright © 2022 - Euro Times.
Euro Times is not responsible for the content of external sites.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In