Contents
Why are Turkey's interest rates high?Due to the stability program carried out by Turkey under the supervision of the IMF in recent years, the government has to follow a tight monetary policy, not to compromise on budget discipline and to keep inflation under control, this is one of the reasons for the high interest rates. Another reason is the relatively high inflation rate.
Why is Turkey reducing interest rates?The biggest reason for the collapse in TL is Turkey's policy to keep interest rates low and to provide economic growth and export potential with competitive exchange rates. This policy has been described as an “unorthodox” approach, as it contradicts the prevailing theory of economics.
Why did interest rates rise?
Many citizens are against interest rates of up to 40 percent due to the rise in inflation. is facing. The policy rates of the Central Bank (CBRT) and the loan rates of banks move in opposite directions. The CBRT's policy rate cuts promptly increased commercial loan rates along with exchange rates and inflation. The competitive environment brought about by the volatility, weakening of predictability in the market and TL liquidity tightness, brought about by the exchange rate-protected TL deposits, increased both loan and deposit interests in banks.
Why were the interest rates lowered?Since lowering the policy rate when inflation is high will create higher inflation, long-term market rates do not fall, on the contrary, they increase. This situation reduces investment appetite, expenditures and production. This is the reason why interest rate cuts do not create the desired economic recovery.
Why are bank interest rates not falling?Loan rates do not fall much This is because market rates are directly affected by inflation expectations and risks. When the exchange rate, inflation and risks increase following the Central Bank's interest rate cut, the market interest rate also increases.
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