Turkey’s central bank on Thursday hiked its key interest rate by another 250 basis points to 45%.
The hike to the benchmark one-week repo rate was in line with economists’ expectations.
It comes amid an ongoing battle against double-digit inflation for Turkey’s monetary policymakers, with the rate hike the latest step in that effort.
Inflation in Turkey increased to 64.8% year-on-year in December, up from 62% in November, and the country’s currency, the lira, hit a new record low against the U.S. dollar earlier in January, breaking 30 to the greenback for the first time.
Analysts predict this will be the last hike for some time, especially with local elections approaching in March.
For those not familiar with this language a “basis point” is .01 of a percentage point. So in this example:
“Turkey’s central bank on Thursday hiked its key interest rate by another 250 basis points”
…would mean an interest rate hike of 2.5%.
To put that into perspective, the USA’s Prime Interest rate (which mortgages, bank loans, and credit card rates are derived) is currently 8.5%. If the USA raised the Prime Interest rate by 2.5% making Prime Interest rate 11% there would be huge HUGE economy impacts. Entire industries overnight would become nonviable. The slow home sales right now would grind to a near absolute halt. Millions of Americans that are servicing revolving debt would see their monthly payments see large increases.
wtf so why turkey did that?, what’s the objective?
It costs more to borrow money so consumers and businesses borrow and spend less and when people spend less it drives down price fighting inflation…more or less the thinking
Because erdogan is a fucking moron, he lowered rates and it resulted in higher inflation so now he’s just doing the opposite after he fucked it even more