Erdogan: Turkey came under 'economic attack' after USA statements

USDTRY May Hit Record High on Turkish Central Bank Inaction

Turkish President Tayyip Erdogan has appointed himself chairman of the country's sovereign wealth fund and completely changed its board, naming Finance Minister Berat Albayrak as his deputy, the country's Official Gazette said on Wednesday.

Thursday's decree and Erdogan's remarks come after the lira's drastic fall in value against the U.S. dollar last month, during one of the worst diplomatic rows between North Atlantic Treaty Organisation allies Washington and Ankara. It later shed some of those gains but was still up over 2.7 per cent in value at 6.15 to the dollar.

"We can not allow the use of the tool of exploitation that is interest rates", Erdogan told a meeting in Istanbul on Thursday.

The increase, which was higher than expected, boosted the lira by five percent against the dollar and may ease investor concern about Erdogan's influence on monetary policy.

It said: "Accordingly, the committee has made a decision to implement a strong monetary tightening to support price stability".

"Tight stance in monetary policy will be maintained decisively until inflation outlook displays a significant improvement".

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The bank must balance concerns over slipping growth, which, although a robust 5.2 per cent in the second quarter on an annual comparison, showed signs of weakness with some analysts predicting Turkey is heading for recession. "A rate hike would be an important step to restore market confidence in the lira". The rate hit the lowest level in two weeks.

The embattled currency has fallen by 40% this year amid a lack of interest rate hikes to control inflation. "If you say "inflation is cause, the rate is the result", you do not know this business, friend", he added.

Anthony Skinner, director of Middle East and North Africa at Verisk Maplecroft, told AFP he believed the hike had already been agreed. In one direction it could hear the siren call of investors craving higher interest rates to draw a line in the inflationary sand and stop the lira's collapse.

The bank later said on Twitter that funding would be provided via the policy rate, the one week repo auction rate, instead of through overnight lending from September 14.

TRT World journalist Mobin Nasir has the latest on the Turkish central bank's decision to increase interest rates to 24 percent.

A growing crisis became acute earlier this year following the detention of an American pastor on espionage and terror-related charges, which prompted Donal Trump to double the import tariffs on Turkish steel and aluminium.

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