Monetary policy

Annual inflation rate accelerates to 58.9 percent

Consumer prices rose more than expected in August, bringing the annual inflation rate from 47.8 percent in July to 58.9 percent, according to data from the Turkish Statistical Institute (TÜİK).

"We are absolutely determined to fight inflation," Treasury and Finance Minister Mehmet Şimşek said after TÜİK released the data on Sept. 4.

Interest rates set to rise further

Rising interest rates have put loan takers, from consumers to governments, in a bind, with many having taken out loans at interbank rates in the red, as they were for eight successive years in the EU.

Successive rounds of rate increases by central banks have unavoidably affected commercial loan rates.

Turkish Central Bank raises policy rate 750 basis points to 25%

Türkiye's Central Bank has hiked its policy rate from 17.5 percent to 25 percent, delivering on its promise of tightening.

The bank lifted the policy rate, the one-week repo rate, for a third month in a row after Hafize Gaye Erkan was appointed its governor in June.

Most economists had expected the bank to deliver a 250 bps rate hike to 20 percent.

Traders await Fed’s Jackson Hole conference

Traders in markets are looking ahead to the Federal Reserve's summer conference for signs of whether the U.S. central bank thinks inflation is under control or more interest rate hikes are needed to cool inflation.

Fed officials have used the Jackson Hole, Wyoming, conference in previous years to indicate changes in policy direction.

Inflation expectations for 2023 rise: Survey

Inflation expectations for 2023 and 2024 have increased in August, the Central Bank's regular survey has shown.

Participants of the survey revised upwards their end-2023 inflation expectations from 43.8 percent to 59.07 percent. They also lifted their forecast for the 12-month ahead inflation from a previous 33.3 percent to 42.1 percent.

Serious Concerns Over Yuan in China

The largest Chinese state banks were busy this week selling US dollars for yuan, both in onshore and offshore foreign exchange markets, to slow down the depreciation of the yuan. While they also trade on their own behalf or to fulfill client orders, state banks often act on the central bank's instructions when the yuan is under pressure, as is the case currently.

China slips into deflation as post-COVID recovery falters

China slipped into deflation for the first time in more than two years in July, official data showed yesterday, as slowing domestic spending weighs on the post-COVID economic recovery.

The reading comes a day after news that the country suffered its biggest fall in exports since the early days of the pandemic, while imports tanked again as domestic and global demand fall away.

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