Turkey Takes Action on Strained Economy With Big Rate Rise

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Turkey’s central bank sharply raised interest rates—defying President Recep Tayyip Erdogan’s demand to cut them—in an attempt to counter the country’s economic problems and reverse growing investor aversion to emerging-market economies, The Wall Street Journal reported. The central bank increased its main interest rate to 24% from 17.75% on Thursday, citing concerns over price stability and saying it would maintain a tight monetary-policy stance until the inflation outlook improves significantly. The turmoil in Turkey has rattled global markets in recent weeks and comes at a precarious time for developing economies around the world, just as investors have started to cast doubt on how long the current period of synchronized global growth can last. Over the past five months, a stronger U.S. dollar has left the Argentine government struggling to repay the dollar-denominated debt it issued in recent years, driving the peso to fall more than 50% against the dollar this year, amid soaring inflation. Read more. (Subscription required.)