The head of Turkey’s central bank told analysts in a call Thursday that it will assess the impact of current interest rate cuts in the first half of next year, an official told Bloomberg.
Turkey’s central bank told analysts in a phone call that it will assess the impact of the current interest rate easing cycle in the first half of 2022, according to an official familiar with the matter.
The official said Bank Governor Sahab Kavcioglu’s comments were intended to reinforce the message that policy makers see limited scope for further rate cuts, and that the bank would consider halting a series of index cuts after its December meeting, and asked not to. They are selected because the notes were not public.
The governor’s comments put him at odds with President Recep Tayyip Erdogan, who has vowed to keep cutting interest rates until elections scheduled for 2023. This triggered a tremor in the lira, which fell to a record low against the dollar earlier this week, prompting the monetary authority to turn Direct intervention in the foreign exchange market for the first time in nearly eight years.
Erdogan says Turkish economy will boom with lower prices
The lira changed little after reports of the Kavcioglu meeting and was trading 1.3% lower at 13.4527 per dollar at 1:38 pm in Istanbul.
The bank has come under fire from investors and analysts for lowering its benchmark one-week repurchase rate by 4 percentage points since September to 15%, while consumer inflation has accelerated to nearly four times the official target of 5%. The lira lost more than a quarter of its value last month alone, bringing losses this year to nearly 45%, more than any other major currency tracked by Bloomberg.
Here are Kavcioglu’s highlights during the call. The bank officially declined to comment:
- Kavcioglu sees slowdown in inflation as temporary factors dissipate
- The governor referred to unrealistic and unhealthy prices in the foreign exchange market
- The Bank sees an increasing demand for investments and job creation
- The Bank undertakes to accumulate reserves