By Karin Strohecker
LONDON, Sept 25 (Reuters) – Turkish policymakers are no strangers to unexpected action when in a tight corner, but analysts said Thursday’s surprise interest rate hike could herald a change of tack on monetary policy.
Although raising rates by 200 basis points during a global pandemic and slump is unusual, analysts welcomed the Central Bank of Turkey’s (CBT) response in the face of rising inflation.
“It was a bold move by the CBT which should restore credibility and improve investor sentiment,” said Christian Wietoska at Deutsche Bank, calling it a “game changer”.
The hike was swiftly followed by a banking watchdog announcement that limits for banks’ FX transactions with foreign entities would be raised, allowing for increased market access and reversing a decision from earlier this year.
“Encouraging moves – suggests the Turkish authorities finally get it,” Timothy Ash at BlueBay Asset Management said.