The Central Bank of Turkey may sharply raise the interest rate

Analysts suggest that the Central Bank of Turkey may raise the interest rate to 40% on Thursday – such a decision is considered the most effective for attracting investment to the country.

The Turkish lira has been declining against foreign currencies for three weeks now. On Tuesday morning, the dollar-lira exchange rate is 23.63 lira per dollar. At the beginning of the year, the dollar was worth 18.73 lira, and before the first round of the presidential election on May 14, its rate rose to 19.6 lira. After the election, growth accelerated.

It is worth noting that the Central Bank of the country has not raised the interest rate for a long time and left it unchanged, currently it is 8.5%. Earlier, President Recep Tayyip Erdogan said that interest rates will decrease while he is in power. However, experts predict that in the near future the regulator will raise the rate due to the situation around the national currency.

Local media note that the expectations of the market and companies are now aimed at starting a new process of raising interest rates. It is widely believed that the Central Bank will raise the interest rate to 15-20% this week, and then continue to increase by 5 percentage points at the next two meetings. 

However, there are also those who believe that the bank can immediately make a significant increase in the rate to 30-40%, and such a sharp step may become the most effective method.