Turkish central bank’s Monetary Policy Committee says it decided to keep its policy rate constant at 14 percent, putting on hold a rate-cutting policy that has reduced borrowing costs by 5 percentage points since September.
Turkish President Erdogan said the country's move to bring exchange rates to a level that reflects local realities reached its purpose as dollar/lira exchange rate dropped to 12.35.
Finance Minister Nureddin Nebati says his ministry worked with Central Bank for days to study alternative scenarios and found that "even in the worst-case scenario" lira-holders will "come out better off."
The new measure is meant to compensate lira-based savers and defend the value of lira holdings against fluctuations in the exchange rate.
Governor Kavcioglu says Turkey will both make reserves permanent and implement a better system that funds production and exports.
Cryptocurrency’s protection against inflation has been one of key drivers behind its popularity with the Turkish public.
Battle between economic optimism and fears about inflation and possible rate hikes that recovery will fuel has continued to play out on trading floors.
The Turkish economy expanded 5.9 percent in the fourth quarter, bringing the year-on-year growth of 2020 to 1.8 percent, the country's statistical authority announced.
Last month, the United States imposed sanctions on Turkey’s defence industry chief and others over Ankara’s acquisition of S-400 missile defence systems from Russia, a move that Turkey called a “grave mistake.”
Central bank governor says stability of Turkish lira a priority for policy decisions and that lira exchange rate has continued to create an upside risk on inflation.
Turkey’s central bank scraps rule that nudged banks to ramp up cheap lending, a step analysts see as a positive shift.
"We are working on both strengthening our economic policies and raising the bar of democracy and freedoms while easing daily life for our citizens," the Turkish president says.
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