Turkey's Central Bank Raises Overnight Rate to 46% in Surprise meeting

The Central Bank of Turkey raised its overnight lending rate to 46% from 44% during an extraordinary meeting, amid turmoil in Turkish markets and a record-low lira.

The Central Bank said in a statement posted on its website that the Monetary Policy Committee (MPC) convened to exchange views on recent developments in financial markets and that, after assessing the risks these developments may pose to inflation expectations, measures were taken to support monetary policy tightening.

The Central Bank also maintained the key repo rate for one week and the Central Bank's overnight borrowing rate at 42.5% and 41%, respectively.

The Central Bank added in its statement that measures related to Turkish lira and foreign currency liquidity were taken to limit market volatility.

The Turkish Central Bank said in a statement that additional measures will be taken to maintain the sound functioning of financial markets when necessary, and that monetary policy will be tightened if a significant and sustained decline in inflation is expected.

Turkish public opinion was rocked yesterday by the arrest of Istanbul Mayor Ekrem İmamoğlu, which led to the Turkish lira falling to a new record low and the Istanbul Stock Exchange index losing 7% of its value.

Today, the 1 United States Dollar equals 37.99 Turkish lira.