WITHOUT PREJUDICE
North Cyprus News – Will Turkey Raise Interest Rates Today?
In a bid to halt the decline in the value of the lira, Turkey’s Central Bank look poised to increase interest rates to investors. Will this be enough? Time will of course tell.
This will almost certainly be mirrored by a interest rate hike to savers in north Cyprus. What really worries me is, can they afford it? Will it be a prudent move. Again, time will tell.
‘Jan. 28, 2014 4:50 a.m. ET
ISTANBUL—Turkey’s central bank governor Tuesday gave a strong signal that it would significantly tighten policy to stop a month-long plunge in the lira ahead of an extraordinary policy meeting billed as a test case for under-pressure emerging markets.
Delivering his quarterly inflation report in Ankara, Erdem Basci shifted to a more hawkish tone, revising the inflation forecast sharply higher and stressing that the outlook for the global economy had darkened. The bank’s expectations for year-end inflation were lifted to 6.6% from 5.3%, Mr. Basci said.
“No one should be in doubt that the central bank will use all its policy tools to converge inflation to the 5% target…Our aim at tonight’s meeting is to avoid a deterioration of pricing behavior and to take steps to ensure price stability,” the governor said.
“We won’t refrain from implementing permanent policy tightening if needed.”
The lira strengthened 0.7% to $2.683 on Tuesday in anticipation of a shift to a tighter policy.
Analysts warned on Tuesday that the governor will have to aggressively raise interest rates at the extraordinary meeting to stop a tumble in the lira that has wiped almost 20% off the currency in the past month.
The bank is set to issue a statement at 2200 GMT.’
Certainly for those who have their money in lira accounts in north Cyprus, it will help negate the reduction in the value of their capital.
Never give in never give up
Pauline Read
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