World Turkey surprises with first interest rate hike in two years
'Circuit break': PM considering national restrictions on social lives to curb infections
Boris Johnson is considering the introduction of new national restrictions - possibly as soon as next week - as the prime minister races to try and get a handle on the spread of coronavirus. With COVID-19 cases now doubling every seven to eight days, the government is looking at introducing nationwide restrictions for a short period to try to "short-circuit" the virus and slow the spread of the disease. Government figures stressed the plans being drawn up stopped short of a full national lockdown, as seen in the spring, when the country was told to "stay at home".
Not a lot of people saw this one coming.
In a surprise move, Turkey’s central bank raised interest rates by 2 percentage points on Thursday to 10.25 percent – the first time in two years policymakers have increased borrowing costs.
New local lockdown rules announced in parts of North West, Midlands and West Yorkshire
Parts of the North West, West Yorkshire and the Midlands have been placed under further localised coronavirus restrictions. The new measures, prompted by a fast rise in COVID-19 cases, have been confirmed by the Department for Health following consultation with local councils and MPs.
The move is designed to reign in inflation and give a boost to Turkey’s embattled currency, the lira. But it also makes it more expensive for businesses to expand and consumers to spend on credit – which cools the economy.
The move was unexpected because of a perception among foreign exchange market participants that the government of Turkish President Recep Tayyip Erdogan would like the central bank to pursue policies that encourage economic growth.
One thing that is certain – the lira needed a helping hand from monetary policymakers.
The Turkish lira is down more than 20 percent this year and has been hitting record lows again this week, falling to 7.7 against the United States dollar.
Foreign exchange traders have punished the lira this year as Turkey has blown through foreign exchange reserves during the coronavirus pandemic. Soaring demand among Turks for hard currency has also contributed to lira weakness.
But news of the rate hike saw the lira strengthen to 7.5572 on Thursday before giving back some of those gains.
Roger Kelly, lead regional economist at the European Bank for Reconstruction and Development, described the surprise rise as a welcome and “bold” policy decision that illustrated that “lessons may have been learned” from Turkey’s 2018 currency crisis.
“With the lira steadily weakening in the face of real policy rates which are the lowest in the emerging market universe, and attempts to tighten policy using the interest rate corridor seemingly ineffective, the central bank needed to act,” he said.
Turkey Sends ISIS Warlord to Azerbaijan to Face-Off Against Putin’s Armenian Allies .
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