Turkey’s Central Bank announces interest rates

The Central Bank of the Republic of Turkey (CBRT) will announce its interest rate decision today.

Turkey’s economy has long been struggling due to rising costs exacerbated by the devaluation of its national currency, the Turkish lira, against the US Dollar and the Euro. Prior to the appointment of the current CBRT governor, Hafize Gaye Erkan, the CBRT employed unorthodox economic policies, keeping interest rates low under the patronage of the ultraconservative President Recep Tayyip Erdogan. However, the CBRT’s new approach focuses on steadily raising interest rates with the hopes of curbing economic depreciation.

Expect the CBRT to raise interest rates by at least 250 basis points following today’s meeting. Moving forward, the CBRT will continue to cautiously raise interest rates during the short-to medium-term. While this strategy will likely slow down the devaluation of the Turkish lira for the time being, this will likely have little to no impact towards Turkey’s dire economic situation. This will in turn, likely push the Turkish government to take out a hefty loan from the International Monetary Fund (IMF) in order to compensate for the economic losses.