The Turkish Central Bank decided on Thursday to keep the interest rate fixed at 50 percent on repurchase operations for a week.

This came in a statement issued by the Central Bank following a meeting held by the Monetary Policy Committee of the Turkish Central Bank, headed by the Bank’s Governor, Yasar Fatih Kara Khan.

The statement explained that as a result of the meeting, it was decided to fix the interest rate at 50 percent.

He added, “Although the Board of Directors decided to keep the interest rate constant, the cautious stance against rising risks to inflation was reiterated.”

The statement stressed that if the bank expects a “significant and permanent deterioration in inflation, the monetary policy stance will be tightened,” noting that it is closely monitoring the effects of monetary tightening on loans and domestic demand.

The central bank raised the interest rate by 500 basis points to 50 percent during its previous meeting on March 21.

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The Consulate General of Turkey in New York City at the Turkish House on Wednesday organized the “Economy and Politics Talks,” the first event of its kind with the participation of economist Nouriel Roubini.

The discussions were moderated by the Turkish Ministry of Treasury and Finance Attaché Gozde Jezmegul, where topics such as global economic developments, geopolitical tensions, inflation, interest rate expectations, trade relations between the United States and China, emerging markets, and artificial intelligence were discussed.

In his speech, the Turkish Consul General in New York, Reyhan Ozgur, pointed out that Turkey hosts many meetings, events and discussion panels, and that they are happy to hold the first episode of a new series of events called “Economy and Politics Talks.”

Ozgur pointed out that the series of events was launched at a time of political and economic uncertainty, explaining: “We are witnessing unprecedented changes and challenges shaping our world through the emergence of new economic forces and new technologies.”

He stressed the importance of engaging in dialogue and exchanging knowledge and experience in times like these.

He stated that they aim to “develop dialogue on political and economic developments between financial institutions, the private sector, government officials and academia through this event,” and the consul expressed his belief that the discussions that will be held will be useful.

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Spot gold prices jumped on Thursday to a new record high above $2,230 per ounce, driven by statements from the US Federal Reserve about an imminent cut in interest rates.

On Wednesday, US Federal Reserve Chairman Jerome Powell said that the Open Market Committee team believes that it will lower interest rates on three occasions later this year.

He stated that lowering interest rates would remain strongly on the table despite the rise in the consumer price index in February to 3.2 percent, up from 3.1 percent in the previous January.

By 08:22 (GMT), spot gold contract prices rose by 1.1 percent, or $31, to $2,230.5 per ounce.

Wall Street analysts expect gold prices to break the $2,300 per ounce barrier later this year due to increased demand, especially from central banks.

At yesterday’s meeting, the Federal Reserve’s Open Market Committee kept interest rates unchanged at a range of 5.25 percent – 5.5 percent and maintained expectations of reducing borrowing costs three times this year.

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The Turkish Central Bank announced on Thursday that it raised the interest rate by 500 basis points to 40 percent on repo operations for a week.

This came during a meeting of the Central Bank’s Monetary Policy Committee, headed by the Bank’s Governor, Hafiza Ghaya Arkan, according to a statement issued by the bank.

The statement stressed that the improvement in external financing conditions, the continuous increase in reserves, support for balancing demand for the current account, and the increase in domestic and external demand for Turkish lira assets contribute strongly to the stability of the exchange rate and the effectiveness of monetary policy.

Last month, the Central Bank raised the interest rate by 500 basis points to 35 percent on one-week repurchase operations.

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Standard & Poor’s International announced on Friday evening that it had raised its outlook on Turkey’s credit rating from “negative” to “stable.”

The agency said in a statement that it confirmed Turkey’s credit rating at “B” and raised its future outlook from “negative” to “stable” due to “policy change.”

The statement indicated that the new economic administration in Turkey raised the interest rate by 21.5 points since June to reach 30 percent in order to combat inflation and reduce the exchange rate, and imposed some indirect taxes to achieve financial balance.

It stated that Turkey’s economy is expected to grow 3.5 percent this year and 2.3 percent next year.

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Crude oil prices rose at the beginning of weekly trading on Monday, driven by Russia’s announcement banning the export of fuel derivatives to most of its markets.

Last week, the Kremlin said that it would ban the export of fuel derivatives, especially (gasoline and diesel), in an attempt to reduce the prices of derivatives sold in the local market.

Despite being subjected to sanctions related to the crude and derivatives industry from the West due to the war in Ukraine, Russia is still a major global exporter of oil and gas.

In early trading today, futures prices for Brent crude for November delivery rose by 0.5 percent, or 46 cents, to $92.42 per barrel.

In the same direction, futures prices for US West Texas Intermediate crude for November delivery rose by 0.56 percent, or 50 cents, to $90.53 per barrel.

The rise in prices also comes at a time when global demand for crude oil has increased for several reasons, the most recent of which is the possibility of the Federal Reserve raising interest rates at a meeting to be held early next November, which means an increase in the strength of the dollar and an increase in its cost to importers.

This month, oil prices recorded unprecedented levels since November 2022, amid the extension of production cuts by members of the OPEC+ alliance and increased demand in Europe and Asia for diesel.

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The Turkish Central Bank announced on Thursday that it raised the interest rate by 500 basis points to 30 percent on repo operations for a week.

This came during a meeting of the Central Bank’s Monetary Policy Committee, headed by the Bank’s Governor, Hafiza Ghaya Arkan, on Thursday.

The Turkish Central Bank confirmed in a statement that “the increase in local and international demand for Turkish lira assets will contribute significantly to price stability.”

It pointed out that tax regulations “have a significant impact on inflation rates due to cost-oriented pressures resulting from wages and exchange rates.”​​​​​​

The statement stressed that “foreign direct investments, improving external financing conditions, the continued increase in foreign reserves, and supporting tourism revenues for the current account will contribute to enhancing price stability.”

It pointed out that “the strong trend in domestic demand and the rise in oil prices is creating additional upward pressures on inflation.”

It stressed that the Monetary Policy Committee “decided to continue the process of monetary tightening in order to control inflation and the deterioration in pricing behavior.”

It also stated that the committee “will continue to make credit and quantitative tightening decisions in addition to increasing interest rates.”

It stressed that the committee will continue to make its decisions within a “transparent and predictable” framework and use all available tools in line with the main goal of “price stability.”

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Data from the Institute of International Finance showed on Wednesday that global debt rose 3.3 percent on an annual basis, or the equivalent of $9.9 trillion, in the second quarter of 2023, reaching a new record level of $307.1 trillion.

The Institute of Finance explained in its quarterly report on global debt that debt rose from the level of $297.2 trillion in the second quarter of 2022.

At the end of the second quarter, global debt was distributed between $57.1 trillion in real estate debt, $90.2 trillion in non-financial entities, $87.3 trillion in government debt, and $71.9 trillion in financial sector debt.

The report explained that high levels of inflation and interest rates suppress bank credit, while markets such as the United States and Japan led this rise.

The report continued: “After seven consecutive quarters of decline, the global debt-to-GDP ratio resumed its upward trajectory in the first half of 2023.”

As interest rates rise and debt levels rise, pushing government interest expenditures higher, domestic debt pressures are expected to increase.

The report finds that the international financial structure is not sufficiently equipped to address unsustainable levels of domestic debt.

The Institute of International Finance stressed the importance of intensified global efforts to reform multilateral development banks to increase climate financing and to accelerate the expansion of environmental, social and governance debt markets.

Successive crises led to an increase in financing needs, with government revenues affected and oil prices falling, which prompted governments and companies to issue debt instruments.

The Institute of International Finance is a global institution that includes more than 470 financial institutions. Its mission is to support the financial industry and risk management. Its membership includes global central banks, major international banks, insurance companies, pension funds, asset managers, and sovereign wealth funds.

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On Wednesday evening, all eyes will turn to the headquarters of the US Federal Reserve to announce the results of its meeting on monetary policy, after the meeting began yesterday, Tuesday, and ends with a press conference by its Chairman, Jerome Powell.

Wall Street analysts estimate that interest rates will remain steady, a decision that, if it happens, would mark the second time in six policy meetings this year that the Fed did not raise interest rates.

Currently, federal funds rates are 5.25 percent – 5.50 percent, which is at the highest level since 2001, according to Fed data.

The Fed will announce its decision and issue quarterly economic forecasts to policymakers by nine o’clock Mecca time.

At its previous meeting last July, the Fed indicated that it would keep interest rates steady and would not make any fundamental changes. But inflation developments last August were worrying.

Consumer price inflation in the United States accelerated to 3.7 percent on an annual basis last August, up from 3.2 percent in the previous July.

The Fed is likely to announce today that it will raise the benchmark federal funds rate at least once this year, with two meetings remaining in November and December.

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On Thursday, the Central Bank of Turkey announced an increase in the interest rate by 650 basis points to 15 percent on “repo” repurchases for a week.

The Turkish Central Bank said in a statement that it “will support the monetary tightening policy gradually when necessary and to the extent necessary until a significant improvement in inflation expectations.”

It added that the Monetary Committee of the Central Bank decided to start the policy of monetary tightening, pointing to raising the interest rate from 8.5 to 15 percent.

Central banks around the world use interest rates to reset consumer prices in their domestic markets by controlling the amount of the interest rate on loans and deposits.

Turkey succeeded in reducing high consumer prices, which exceeded 85 percent to 39.59 percent, amid expectations that the downward path will continue for the coming months.

Earlier this month, President Recep Tayyip Erdogan said, “We will take decisive steps to combat inflation and intensify our efforts to protect large segments of our people from the effects of inflation.”

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