The Central Bank of Turkey will today announce today the routine interest rate decision for January. The official statement is
The Central Bank of Turkey will today announce today the routine interest rate decision for January.
The official statement is set to be released following the Monetary Policy Committee’s first board meeting this year. On December 24, the actual interest rate was 2% higher than that of the previous month. Still, the bank is likely to leave rates unchanged at 17%.
After uncontrolled inflation saw the lira tumble against the US dollar and the euro, expect Ankara to continue to raise interest rates in the short to medium-term as the central bank aims to get inflation under control. While higher rates are likely to negatively affect the foreign investment climate in the country in the short-term, in the medium- to long-term they will lower Turkish public debt, increase investor confidence that the country has a sound monetary policy, and decrease inflation, with the Turkish lira likely to recover significantly against the US dollar and the euro. Renewed faith in Turkish sound monetary policy will attract greater FDI in the medium- to long-term and, despite the negative short-term outlook, Turkey’s economy can be expected to grow 4.0% in the new year.