[ad_1]
The Fed does not raise interest rates and follows Erdogan
Lira collapse, the stock markets crushes – What now, Mr. Erdogan?
Despite high inflation, the Turkish central bank leaves its key rates surprisingly unchanged.It follows the will of President Recep Tayyip Erdogan.The reaction of investors is clear: the Turkish lira collapses, the Istanbul Stock Exchange crushes.
Despite the very high inflation, the Turkish central bank did not note Tuesday its interest rate director, meeting the requirements of President Recep Tayyip Erdogan. Shortly after the reelection of Erdogan and the introduction of the presidential system, the central bank left its key rate at 17.75%.
The Turkish president is a declared opponent with high interest rates. The monetary decision triggered shock waves in the Turkish financial markets. The national currency and the Istanbul Stock Exchange collapsed. The dollar is appreciated 4.3% to 4.9373 lire. The stock index rose more than five percent to the biggest daily loss in two years.
"Although the central bank is nominally independent, it is unlikely that this decision will be politically biased," said Paul McNamara, head of emerging market badets at GAM Investments, a London-based badet manager. The damage caused by a weaker read is far more important than what it would have been a rate hike.
Read also: How President Erdogan Has Become the Burden of Reading it
Forex strategist Piotr Matys of Rabobank said the decision was disappointing given the acceleration of inflation. The lira is again under sell pressure
The interest rate meeting of the central bank was the first since the reelection of Erdogan. Economists were expecting an increase. After all, inflation was about 15.4% higher in June than it was in 14 years. Turkish Finance Minister Berat Albayrak, a presidential son-in-law, announced on Tuesday determined measures to combat inflation. Steps have already been taken, he said in a letter after a meeting with businessmen.
President Erdogan announced that he would exercise greater control over the central bank and declare war on high interest rates. His repeated criticism of the interest rate policy had raised concerns among investors, the independence of the central bank could be compromised. With the constitutional changes in force, Erdogan has more power than any other head of state in Turkey before him. For example, he can partially bypbad Parliament by decrees
Rei / Reuters
© magazin manager 2018
All rights reserved
Reproduction only with the permission of the manager magazin Verlagsgesellschaft mbH
[ad_2]
Source link
