The Turkish decision has implications both for the lira and for other emerging markets.
The overnight level was 7.75%
This is a HUGE jump, expectations were only for a 2 – 3% hike
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- overnight lending rate to 12 from 7.75%
- one week repo to 10% vs. 4.5%
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- The Turkish central bank said it decided to implement strong tightening for price stability and to simplify operational framework
- Says to maintain tight monetary policy until clear improvement in inflation outlook
- Sees inflation at 5% in mid 2015 due to this stance
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AUD and NZD both higher after the announcement (as is the Turkish lira, too) – the market taking this a good positive for ‘risk’ (according to market perception … but let’s keep this in perspective … no offence intended but its Turkey we are talking about here … there, I probably have offended by saying that … but, seriously? )
