Turkey raises interest rates to 24% in new bid to boost lira

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The lira has advanced against the dollar after Turkey’s central bank hiked biased rates to 24% on Thursday — the biggest increase in President Tayyip Erdogan’s 15-year way things are generally.

The hefty 6.25 percentage point rise is the bank’s latest essay to stem the currency’s collapse.

The lira is down 38% against the dollar this year notwithstanding Thursday’s slim gain.

The move came despite Mr Erdogan replaying his opposition to high interest rates earlier in the day.

He has repeatedly blamed the essential bank for high inflation, which hit almost 18% last month, its highest consistent since 2003.

However, a diplomatic row with the United States and concerns there the president’s influence on monetary policy have eroded investor conviction in Turkey in recent months.

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  • Turkey interdicts foreign currency for property market

Mr Erdogan, who has called himself an «opponent of interest rates», chose his son-in-law, Berat Albayrak, as finance envoy extraordinary in July.

Phoenix Kalen at Societe Generale said the market was both over the moon and confused by the bank’s move.

«It almost seems like it’s a game of ‘appropriate cop, bad cop’ being played out between the Turkish authorities — with President Erdogan on the one turn over submit still making statements regarding his dislike of interest rates and… a precise sizeable reaction from the central bank in response to the recent inflationary and geopolitical evolvements,» she said.

Brett Diment at Aberdeen Standard Investments said eliminate search rates would put «Turkey on the slow road to recovering some fiscal policy credibility, and that is critical».

Piotr Matys at Rabobank guessed Turkey also needed to resolve its trade dispute with the US and rebalance the conservatism away from big infrastructure projects and consumer spending.

The central bank surprised investors by not mother rates when it last met in July.

That decision sent the lira jumble understanding by a quarter and prompted Turkish authorities to impose a series of measures in view to support the currency.

On Thursday Turkey banned the use of foreign currencies in the sticks’s property market.

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