The monetary policy decision was expected in the market after Turkish President Recep Tayyip Erdogan secured a change to the top of the Central Bank. The predecessor of the current central bank governor, Sahab Kafcioglu, has tried several times in the past few months by raising interest rates to control the sharp rise in prices in Turkey.
In March, the Turkish president fired the central bank chief for the second time in a few months. In the past few months, Erdogan has repeatedly called for low interest rates, often referring to the key rate as “the mother of all evils”. Doubts about the independence of the central bank have already been raised in the past.
According to the latest data, inflation in Turkey exceeded 16 percent in March. Inflation in emerging markets has been on the rise for about two years. During this period, the rate roughly doubled, starting at around 8 percent.
In the foreign exchange market, the Turkish lira responded to the interest rate decision with losses. One US dollar traded at 8.15 pounds. The pound lost about 1 percent of its value compared to the previous day.