Fitch: Turkey’s sudden and large interest rate cut is another step...

An official at the credit rating agency Fitch today described Turkey’s surprisingly large interest rate cut this week as another step in the wrong direction and that the agency is monitoring the extent of the damage this measure could do to bank and corporate finance.
Eric Arispi, senior Turkey director at Fitch, told Reuters that the easing of monetary measures was a premature step, and appeared to be politically motivated without leaving the central bank with the margin needed to protect the faltering lira.
The central bank cut its key interest rate to 16% from 18% on Thursday even though inflation has reached nearly 20%, sparking a wave of rapid selling of the lira, the value of which has fallen to new record lows.
“For us, the focus is now on knowing to what extent this move in the wrong direction of monetary policy, or this premature monetary easing, can lead to reduced external financing of the economy, especially for banks and companies,” Arespi said during the interview.
“If this is the case, this could lead to continued international pressure on reserves for a while,” he added.
He added that although net foreign exchange reserves have risen since April from less than $10 billion, it “does not leave much room for the central bank to build a very strong defence to defend the currency if necessary.”
Fitch revised Turkey’s outlook to stable from negative in February while keeping the rating at “BB-“, a month before President Erdoğan fired the central bank governor and replaced him with Shihab Kavcioglu, who shares his unorthodox view that high interest rates cause inflation.

These were the details of the news Fitch: Turkey’s sudden and large interest rate cut is another step... for this day. We hope that we have succeeded by giving you the full details and information. To follow all our news, you can subscribe to the alerts system or to one of our different systems to provide you with all that is new.

It is also worth noting that the original news has been published and is available at saudi24news and the editorial team at AlKhaleej Today has confirmed it and it has been modified, and it may have been completely transferred or quoted from it and you can read and follow this news from its main source.

NEXT Federal Reserve Chairman: “Omicron” threatens the recovery of the US economy

Author Information

I am Jeff King and I’m passionate about business and finance news with over 4 years in the industry starting as a writer working my way up into senior positions. I am the driving force behind Al-KhaleejToday.NET with a vision to broaden the company’s readership throughout 2016. I am an editor and reporter of “Financial” category. Address: 383 576 Gladwell Street Longview, TX 75604, USA Phone: (+1) 903-247-0907 Email: [email protected]