Due to persistently high inflation and currency turbulence, the Turkish central bank is changing its monetary policy course under new leadership. The policy rate will be raised from 8.5 percent to 15 percent. There are also changes in Great Britain, Switzerland and Norway.
Economists polled by Reuters had expected an even bigger jump to 21.0 percent in Turkey. In 2021, the central bank cut its key interest rate from 19 percent to the previous 8.5 percent, even though inflation reached 85.5 percent last October, the highest level in the past 24 years.
Western central banks, such as the US Federal Reserve and the European Central Bank, fight inflation with higher interest rates.
situation is worrying
The current interest rate policy has led to a currency crisis. The national currency, the lira, lost 44 percent in value in 2021 and another 30 percent in 2022. This exacerbates the inflation problem, as the country, which is poor in resources, imports a lot of goods from abroad and has to pay for them in foreign currency.
Changes in Great Britain, Switzerland and Norway
The increase in the policy rate in the United Kingdom was also surprising. The Bank of England raised its key monetary policy rate by half a point to five percent on Thursday. It was the 13th rung in a row on the interest rate ladder. The central bank has been trying for a year and a half to curb the alarmingly high inflation on the island. With moderate success.
Inflation in Norway at record high
Norway is also fighting inflation: the key interest rate was raised by 0.5 percentage point. At the same time, the central bank signaled that interest rates could rise further in August. The central bank is particularly concerned about core inflation, excluding energy prices and taxes. It rose by 6.7 percent in May – a record value.
Switzerland is stepping up monetary tightening
Switzerland is raising rates again because of what it sees as persistent inflationary pressures – albeit less sharply than recently. And she holds out the prospect of further monetary tightening if necessary. The policy interest rate of the SNB will be increased by 0.25 percentage point to 1.75 percent, the central bank announced on Thursday.
The inflation specter is also raging in Germany
The inflation specter is also omnipresent in Germany. The European Central Bank has therefore raised interest rates to four percent for the eighth time. Interest rates were only higher before the financial crisis.
Austria: ECB raises interest rates
The Vienna stock exchange closed on June 15 with clear discounts after a new interest rate hike by the ECB. The leading index ATX fell by 0.81 percent to 3,185.17 points. Following the eighth straight rate hike, President Christine Lagarde announced another rate hike ahead of the next meeting in July, dampening sentiment among equity investors. You are not at your destination.
Source: Krone
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