Turkey ends low interest rate policy

Turkey’s central bank responded to fears of mounting inflation by jettisoning its low interest rate policy on the 26 October 2011, the latest indication that its economic success story was coming under strain.

The move would steadily increase the cost of borrowing across the country’s economy. On the day of the announcement, the currency strengthened by about 2% against the dollar.

The government of Recep Tayyip Erdogan, Prime Minister, had bases much of its electoral appeal on Turkey’s vigorous economy – with growth in 2011 above 10% – and had previously strongly defended the bank’s 'unorthodox' low interest policy.

ESO: Background information: Concern as Turkish growth hits 11% http://www.europeansources.info/record/concern-as-turkish-growth-hits-11/

ESO: Background information: Turkey cuts interest rates in surprise move http://www.europeansources.info/record/turkey-cuts-interest-rates-in-surprise-move/

Central Bank of the Republic of Turkey: Press Release, 20.10.11: Interest rates http://www.tcmb.gov.tr/yeni/announce/2011/ANO2011-45.php

Central Bank of the Republic of Turkey: Press Release, 26.10.11: Summary of the Monetary Policy Committee Meeting http://www.tcmb.gov.tr/yeni/announce/2011/ANO2011-47.php

---