Why Turkey Had to Simplify Its Tangled Interest Rates: QuickTake

Turkey’s central bank has simplified a multi-rate structure that for years left investors struggling to understand its policy. By more than doubling the one-week repo rate, and establishing it as the new benchmark, the bank hopes to end years of confusion about which measure to watch in its tug-of-war with President Recep Tayyip Erdogan. After the adjustment, the benchmark rate will be 16.5 percent, unchanged from the current main funding rate. Happier investors may help Turkey arrest a slide in its currency.

According to the central bank, all funding will be done through the one-week repo rate, while the overnight lending and borrowing rates will be placed equidistant at 150 basis points above and below the benchmark, respectively.