Turkey’s central bank aggressively raises its main interest rate by 4.75 percentage points after a major shake-up of the country’s economic team.

Turkish lira banknotes are seen in this illustration taken on June 6, 2019.
Turkish lira banknotes are seen in this illustration taken on June 6, 2019. (AA)

Turkey's Central Bank has increased its one-week repo rate, also known as the bank's policy rate, from 10.25 percent to 15 percent, tightening its monetary policy to ensure price stability.

The decision was announced in a statement on Thursday following the bank's first policy meeting under its new governor, former Finance Minister Naci Agbal, who was appointed on November 7.

The Monetary Policy Committee (MPC) decided to provide all funding through the main policy rate, which is the one-week repo auction rate.

"In the periods ahead, all factors affecting inflation will be taken into account, and the tightness of monetary policy will be decisively sustained until a permanent fall in inflation is achieved," the bank said.

The Turkish lira gained nearly two percent in value against the US dollar to reach 7.55 moments after the announcement.

Last month, the Central Bank kept its one-week repo rate steady at 10.25 percent.

In its eight meetings in 2019, the bank cut the rate by a total of 1,200 basis points, from 24 percent.

This year, the bank boosted the number of its MPC meetings to 12.

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Turkey initiates new economic reform era

The announcement came a day after Turkey's President Recep Tayyip Erdogan said the country would focus on economic growth.

He said that Turkey would concentrate much more on production, investment, employment, and exports for the economic growth of the country. 

"There is a new era ahead of us now," said Erdogan, while addressing an economic council meeting of the Turkish Union of Chambers and Commodity Exchanges in the capital Ankara on Wednesday.

The government will proceed by maintaining fiscal discipline, with a growth and employment-oriented approach, he said.

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Source: TRTWorld and agencies