A surprise interest rate cut by Turkey’s central bank caused the country’s currency to depreciate significantly on Thursday. In return, the dollar rose almost 2% to a record high of 8.7998 lire. The euro gained as much as 2% and was trading at 10.3193 lira, just below its June high. Turkey’s central bank also cut its key rate due to high inflation. The key rate for monetary policy fell from 19% to 18%. A change in monetary policy was necessary, the monetary authorities commented on their decision. The inflation rate climbed to 19.25% in August due to higher food and energy prices. This is the highest level for over two years and is therefore above the policy rate.
The Bank of England has stuck to its accommodative monetary policy despite the rapid rise in prices. Monetary authorities around central bank chief Andrew Bailey have left the key rate at 0.1%. In addition, they kept the volume of their current securities purchase program equivalent to just over $ 1 trillion. In August, consumer prices in Britain rose 3.2% from the previous year – the highest value since March 2012. The pound sterling cost 1.1685 euros, or 0.4 % what’s more.
The euro has recovered from its losses the day before despite weak economic data. The European common currency climbed 0.3% to $ 1.1724. The euro zone’s recovery lost unexpected momentum in September. The index of purchasing managers in the private sector – industry and service providers combined – fell from 2.9 to 56.1 points. “There are growing signs that the eurozone economy will not be able to maintain the high growth rate in the last quarter,” said Christoph Weil, Commerzbank economist.