Turkey's central bank hikes interest rate to 50%
interest rate on Thursday, resuming its tightening cycle as one of the world's highest inflation rates rose again last month.
The bank's monetary policy committee decided to raise the policy rate from 45 percent to 50 percent, with a statement citing «the deterioration in the inflation outlook».
The central bank had declared that its hike in January would be its last as the level was sufficient to start easing the cost-of-living crisis.
But annual inflation rose again in February, reaching 67.1 percent.
The bank had kept its interest rate unchanged in February after having raised it from 8.5 percent to 45 percent since June.
The central bank said Thursday that its «monetary policy stance will be tightened in case a significant and persistent deterioration in inflation is foreseen».
«Hugely positive move» by the central bank hiking against expectations, emerging markets economist Timothy Ash remarked in emailed comments.
He said it showed the economy team led by Finance Minister Mehmet Simsek and the central bank has been given «a strong mandate to do whatever its takes to fight inflation.»
«They are proving their independence now,» Ash commented.
-'Encouraging signal'-
Economists say pressure on Turkish policymakers is building ahead of local elections on March 31 as capital inflows have slowed and foreign exchange reserves are falling again.
The economic crisis nearly cost Erdogan his re-election last May.
He won after showering his supporters with massive pay increases and introducing an early
