London, Thursday, 22 June 2023
On June 22, the Central Bank of Turkey increased the benchmark one-week repo rate by 650 basis points to 15 percent, the highest level since November 2021.
Markets had anticipated a higher gain of 21%. With the appointment of Mehmet Simsek as the new Treasury and Finance Minister and Hafize Gaye Erkan as the head of Turkey's central bank, it represents a turnabout from President Tayyip Erdogan's unconventional economic policies.
The Committee made the decision to start the monetary tightening process in order to stabilise inflation expectations, establish the disinflation course as quickly as possible, and restrain the worsening in pricing behaviour.
Monetary policy will continue to be strengthened as much as necessary in a timely and progressive manner, according to policymakers.
After the rate increase, which was smaller than anticipated, the Turkish lira plunged to a record low, according to data from Bloomberg. At 2.35 p.m. in Istanbul, the currency fell 2.6% to 24.20 against the US dollar.
(Source: Central Bank of the Republic of Turkey // Edit by: The Decision Maker - Finance editors)