The central bank’s surprises in Türkiye, with a high rate of the difference between 350 Basis

The Central Bank in Türkiye surprised the markets on Thursday when it raised the main interest rate, which is the re -purchase of one week, from 42.5 % to 46 %, and ending the mitigation cycle that started in December last year.

The decision comes on the back of economic turmoil due to the American definitions The main political journey is unarmed and the investor After the arrest of the mayor of Istanbul and opposition leader Ikram Eamoglu in March.

“The decisiveness related to a narrow monetary position is to enhance the inflation process through moderation in local demand, real estimate in the Turkish lira, and improvement in inflation expectations.”

The Committee cited “the potential effects of increased protection in global trade on the inflation process through global economic activity, basic commodity prices and capital flows,” and said, “The narrow monetary position will be preserved until price stability is achieved through a continuous decrease in inflation.”

The annual inflation in Türkiye came 38.1 % in March.

The increase in the rate comes in the face of the exhaustion of the important foreign currencies, as the Turkish Central Bank spent up to 25 billion dollars in three days after the arrest of the Imamoglu and the protests on March 19 to defend a pounds, which was briefly shocked to a record level more than $ 40 for the US dollar. Turkish markets initially fell on the news of detention, and on March 23, the country of the country obtained the rules of sales and relaxation in an attempt to support the shares.

On March 20, the Central Bank LIRA DROP pushed an increase in the 200 Basis emergency, which raised the lending rate to 46.00 %, which is the upper part of the interest rate corridor.

Consequently, raising the interest rate on Thursday is a largely technical amendment after Mars’s developments, according to Brad Bishtil, the international president of FX in Jefferies.

“We will see what (Turkish President Recep) Erdogan says about the movements of the central bank, but so far the central bank has done a good job to move in political noise in its continuous battle against inflation,” Bishtel wrote in a note after the bank announced on Thursday.

“The central bank’s move” would add a threat that was delivered last month and indicates that policy makers have become more concerned about the upward risks of inflation. “

Far wrote that politicians will closely monitor capital flows amid the current uncertainty about American trade protection. “

Capital Economics evaluates inflation in Türkiye in a declining path in the coming months, and they do not see more stress in the store.

The note added: “It is clear that the central bank’s reduction cycle has reached a large barrier, and it may take some time before restarting the mitigation cycle. We now expect that the rate of re -ribo will be for one week to end the year by 40.00 % (previously 35.00 %).”