Turkish Lira Hits Record Low After Bank Holds Rates

Turkey’s central bank held its key interest rate on Tuesday, as mounting political and military concerns push the Turkish lira to record lows.

The central bank left its main rate unchanged at 7.5 percent, as forecast by economists polled by Reuters.

After the decision, the lira hit its weakest ever level against the dollar, falling as low as 2.8850, having traded at 2.8675 beforehand.

In a statement, the central bank said a backdrop of falling food and energy prices, plus domestic and global market uncertainty had factored in its decision.

“Processed food and energy price developments affect inflation favorably in the short run, while exchange rate movements delay the improvement in the core indicators,” it said.

“Considering this delay and taking into account the uncertainty in domestic and global markets and the volatility in energy and food prices, the Committee decided to implement a tighter liquidity policy as long as deemed necessary.”

The bank added that future monetary policy decisions would be “conditional on the improvements in the inflation outlook.”

“Inflation expectations, pricing behavior and other factors that affect inflation will be monitored closely and the cautious monetary policy stance will be maintained… until there is a significant improvement in the inflation outlook.”


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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.