Yetkin Report

  • Türkçe
  • Politics
  • Economy
  • Life
  • Writers
  • Archive
  • Contact

İmamoğlu effect: Turkish Central Bank raised policy rate to 46 pct

by YetkinReport / 17 April 2025, Thursday / Published in Economy

Reversing the positive trend of recent months, the Turkish Central Bank raised the policy rate to 46 percent. Türkiye sold some 40 billion USD of its reserves to curb the rise of foreign exchange following the arrest of İmamoğlu, the Mayor of İstanbul.

With a surprise decision, the Central Bank (CBRT) Monetary Policy Committee (MPC) raised the policy rate by 350 basis points to 46 percent on April 17. The Committee raised the Central Bank’s overnight lending rate from 46 percent to 49 percent and the overnight borrowing rate from 41 percent to 44.5 percent.
In its written statement, the Central Bank said that it had to raise interest rates (despite the known opposition of President Tayyip Erdoğan) due to the following factors:
– Monthly core goods inflation is expected to rise slightly in April due to developments in financial markets.
– Leading indicators suggest that domestic demand has been above projections and has had a dampening effect on inflation.

– Inflation expectations and pricing behavior remain a risk factor for the disinflation process.
The interest rate, which the Central Bank has gradually reduced from 50 percent since December 2023 to 42.5 percent in March 2024, has again exceeded its level in January 2024.

Central Bank and the İmamoğlu effect

Before the recent political developments, the Central Bank was expected to keep interest rates at 42.5 percent in April.
However, especially after the sharp reaction in the markets following the detention of Ekrem İmamoğlu, the Metropolitan Mayor of İstanbul on March 19 (who was arrested and removed from office afterwards), economists such as Mahfi Eğilmez, Fatih Özatay, Hakan Kara and foreign investors such as Jefferies, for example, started to say that the policy rate should be raised to 46 percent, like the lending rate, so that at least the damage could be mitigated.
Credible economists were worried that the decision to arrest İmamoğlu would further burden the economy. The latest MPC decision shows that they were right.
The fact that the Central Bank, which was reported in the media to have sold around 40 billion dollars from public reserves to curb the increase in the exchange rate after İmamoğlu’s detention, raised interest rates again is not good news for the anti-inflation program led by the Treasury and Finance Minister, Mehmet Şimşek.

Yeni yazılardan haberdar olun! Lütfen aboneliğinizi güncelleyin.

İstenmeyen posta göndermiyoruz! Daha fazla bilgi için gizlilik politikamızı okuyun.

Aboneliğinizi onaylamak için gelen veya istenmeyen posta kutunuzu kontrol edin.

Tagged under: Ekrem İmamoğlu, inflation, Mehmet Şimşek, policy rate, Turkish central bank, Turkish economy

What you can read next

Albayrak the first minister Erdoğan sacrificed to opposition
Turkish Airlines to be rebranded as Türkiye Hava Yolları
Central Bank foresees higher inflation, weaker Turkish lira
  • Proving it can disrupt the game if not invited: unseen power of Türkiye28 May 2025
  • Pro-gov’t paper Yeni Şafak slams Turkish economy: an anti-Şimşek op27 May 2025
  • US Ambassador Barrack: Syria will not be divided, no new Sykes-Picot26 May 2025
  • Özel to Erdoğan: “You are a local dictator. You will leave as you came.”20 May 2025
  • UK-Türkiye: More than just a free trade agreement on the horizon20 May 2025
  • Towards a simultaneous solution to Ukraine, Syria and the Kurdish issues16 May 2025
  • The PKK’s decision to dissolve and questions to the Turkish government13 May 2025
  • Turkish public awareness of the disbanding of the PKK is low: survey13 May 2025
  • Türkiye is at the threshold for a solution to its chronic Kurdish problem9 May 2025
  • Security is the new dynamic in EU-Turkish relations9 May 2025
Search the news archive...

Politics

Economy

Life

Writers

Archive

Türkçe

About

Impressum

FAQ

Advertising

Contact

Made with ♥ by tbtcreative.com © 2022 yetkinreport.com All rights reserved.

Yetkin Report     ·      Help     ·      User Agreement     ·      Legal

TOP