Basci Says Interest Rates No Response to Fed-Battered Lira
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Turkey’s central bank will only increase interest rates if it sees two-year inflation expectations worsening, Governor Erdem Basci said.
Basci said today he’s providing short-term forward guidance to end a “vicious circle” of market bets that the central bank would respond to volatility in the lira. In an interview with the state-run Anatolia news agency Aug. 27, he pledged not to change interest rates this year, and said the lira could appreciate to 1.92 per dollar by year-end. The bank will rely on gross foreign exchange reserves of $127 billion to defend the currency if needed, he said today.