(Bloomberg) -- Turkey’s central bank raised interest rates to halt a slide in the lira that’s seen the currency post a series of record lows.
The central bank raised its late liquidity window rate by 300 basis points to 16.5 percent, after an extraordinary meeting of its monetary policy committee on Wednesday to “discuss recent developments.” It kept other rates unchanged, describing the move as a “powerful monetary tightening” and saying it’s ready to continue using all instruments.
The lira reversed Wednesday’s losses after the bank’s move. It was trading 0.7 percent stronger at 4.6367 per dollar as of 7:32 p.m. in Istanbul. The currency earlier fell as much as 5.5 percent.
The central bank acted after three weeks of turmoil on Turkey’s currency markets. Turkish President Recep Tayyip Erdogan, who’s seeking re-election next month, has publicly opposed any moves to raise interest rates, while investors and economists argued that was the only way to halt the rout. Erdogan told Bloomberg in an interview this month that he’ll seek more control over monetary policy if he wins the vote.
The central bank’s rate-setting committee hadn’t been scheduled to meet until June 7. After news broke of its emergency session on Wednesday, Finance Minister Mehmet Simsek said on Twitter that it’s time to restore the credibility of Turkey’s monetary policy.
To contact the reporters on this story: Onur Ant in Ankara at oant@bloomberg.net;Benjamin Harvey in Istanbul at bharvey11@bloomberg.net
To contact the editors responsible for this story: Benjamin Harvey at bharvey11@bloomberg.net, Ben Holland, Mark Williams
©2018 Bloomberg L.P.
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