written Within a few months, the Turkish Prime rate will arrive in the single-digit range, Goldman Sachs analysts, the financial news Agency Bloomberg recently. "The managers will prioritize growth and interest rates as far as possible to reduce, without destabilizing the Lira," - quoted by Bloomberg, the analysts of the Bank.

This will also put the Turkish Lira under pressure again. "The recent inflation dynamics and the growth of the money supply to increase, in our view, the risk of new Lira volatility," concluded the Banker. The Turkish Central Bank has cut in half in spite of the high Inflation in the country is the benchmark interest rate since last July, already more than 24 percent to only an 11.25 percent. With the stock recommendations of the Bernecker exchange-compass, you can get more out of your money! (Partner activity) 30 days free to try!

Erdogan wishes to get lower interest rates

even that, However, President Recep Tayyip Erdogan has so far been too little. Erdogan is an avowed enemy of high interest rates. According to observers, the slopes on the one hand, with Erdogan's religious views, since interest is usury outlawed in Islam particularly. On the other hand, Erdogan is convinced that low interest rates act effectively against Inflation – a direct contrast to the views of most Economists and Central bankers.

The interest rates in Turkey is expected to decrease about more. Last summer, only threw Erdogan, the Central Bank chief Murat Cetinkaya out, because this was against drastic cuts in interest rates. Cetinkayas successor Murat rang Uysal, in turn, his term of office promptly with a cut in Interest rates by 425 basis points – or 4.25 per cent–.

The Goldman analysts expect the key interest rate is expected to decline by the end of the quarter at 10.75 percent, up to the end of the second quarter to just 10 percent, and finally to 9.75 at the end of the third quarter. There, in turn, the policy rate until year end, according to the forecast. Previous estimates were assumed to be at an interest rate of eleven percent by the end of the second quarter.

Inflation rises unexpectedly strong

If Inflation falls faster than the interest rate, the real interest rate in Turkey is negative. In January, the price boost was 12.15 percent, the highest Rate in the last five months. For the second Time in a row, the Inflation accelerated in addition, stronger than expected, as Bloomberg noted.

The significant rise in Inflation in January – the currency experts of Commerzbank referred to as a new type of risk for the Lira left the exchange rate of the Lira at the beginning of February under the age of six Lira per Dollar to fall. For the first Time since may, the price fell below this mark, the Turkish state had defended banks, according to Bloomberg previously. Gold, commodities, currencies - the market analysis of the COT Report gives the correct view. (Partner offer) Now 30 days free of charge analysis to read!

Also to the Euro, the Turkish Lira has recently lost. Last, a Euro was 6,570 Turkish Lira value. Before a little less than a year, the Euro had cost less than six Lira. However, the currency pair EUR/TRY is still a good piece of its 52-week-High-at around seven Lira per Euro, while the Dollar-Lira exchange rate has come closer to this much.

Should press the Turkish Central Bank interest rates at a consistently high level of Inflation in fact, as soon as Goldman expected, is likely to lose the Lira to the ground. The Central bankers of the country do not seem to care but. Their inflation forecast, namely, provides for an inflation rate of 8.2 percent for this year under the benchmark interest rate, Goldman Sachs predicts.

topic: real interest rate remains negative - Lira before the new turmoil? Turkish Inflation rises more than expected

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Date Of Update: 10 February 2020, 16:00