Last minutes note: Turkey rate hike meant as volatility buffer
- The bank hiked its policy rate by a more than expected 200 basis points on Thursday last week.
- Two days later, President Tayyip Erdogan replaced the hawkish Agbal with a like-minded critic of high rates, Sahap Kavcioglu, in a shock move that sparked abrupt selloffs in the lira and Turkish assets.
ISTANBUL: Turkey's central bank raised interest rates to 19% last week as a "significant buffer" against market and inflation volatility, it said in minutes of the last policy meeting headed by governor Naci Agbal before he was dismissed.
The bank hiked its policy rate by a more than expected 200 basis points on Thursday last week.
Two days later, President Tayyip Erdogan replaced the hawkish Agbal with a like-minded critic of high rates, Sahap Kavcioglu, in a shock move that sparked abrupt selloffs in the lira and Turkish assets.
In minutes of the meeting, the bank said: "The tight monetary stance will serve as a significant buffer against external and temporary volatilities in the context of inflation expectations, pricing behavior and financial market developments."
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