Turkish central bank raises lending rate to 12% / Financial turmoil hits emerging economies

The Turkish central bank raised its overnight lending rate to 12% from 7.75% after an emergency meeting on the 28 January 2014.

The move was said to have faced opposition from Prime Minister Tayyip Erdogan. Keen to maintain economic growth ahead of elections in the spring of 2014, Mr Erdogan had been a vociferous opponent of higher borrowing costs, railing against what he describes as an 'interest rate lobby' of speculators seeking to stifle growth and undermine the economy.

Investors sought out the safe havens of German bonds and the Swiss franc on the 29 January 2014 after deep splits in Turkey over the interest rate increases meant only the briefest of respites from the escalating crisis in global emerging markets.

• Primary Source

Reuters, 28.01.14: Turkish central bank makes massive rate hikes to stem lira fall http://www.reuters.com/article/2014/01/28/us-turkey-centralbank-rates-idUSBREA0R1W420140128

Website: Central Bank of the Republic of Turkey http://www.tcmb.gov.tr/yeni/eng/

TCMB: Press Release, 28.01.14: Press Release on Interest Rates http://www.tcmb.gov.tr/yeni/announce/2014/ANO2014-06.php

TCMB: Press Release, 28.01.14: Open Letter Written to the Government Pursuant to Article 42 of the Central Bank Law http://www.tcmb.gov.tr/yeni/announce/2014/ANO2014-05.php

TCMB: Press Release, 28.01.14: Press Release on Summary of the Monetary Policy Committee Meeting http://www.tcmb.gov.tr/yeni/announce/2014/ANO2014-04.php

TCMB: Press Release, 29.01.14: Ending the Additional Monetary Tightening Policy http://www.tcmb.gov.tr/yeni/announce/2014/ANO2014-07.htm

Hurriyet Daily News, 29.01.14: Turkey's Central Bank makes massive rate hikes to stem Lira fall http://www.hurriyetdailynews.com/turkeys-central-bank-makes-massive-rate-hikes-to-stem-lira-fall.aspx?pageID=238&nID=61699&NewsCatID=344

Website: Turkish Statistical Institute http://www.turkstat.gov.tr/Start.do

Deutsche Welle, 29.01.14: Turkey's central bank raises its key interest rate http://dw.de/p/1Ayhn

The Guardian, 29.01.14: Emerging markets crisis sees rush for safe havens http://www.theguardian.com/business/2014/jan/29/emerging-markets-crisis-rush-for-save-havens

Hurriyet Daily News, 29.01.14: Rate hike spared Turkey's credibility, threat to growth limited: Finance minister http://www.hurriyetdailynews.com/rate-hike-spared-turkeys-credibility-threat-to-growth-limited-finance-minister.aspx?pageID=238&nID=61714&NewsCatID=344

Deutsche Welle, 30.01.14: Financial turmoil hits emerging economies http://dw.de/p/1Azf1

Deutsche Welle, 31.01.14: Faltering economy in Turkey is self-inflicted http://dw.de/p/1Azsa

Taraf, 03.02.14: Erdoğan's conspiracy theories harm Turkey (via Euro|Topics) http://www.eurotopics.net/en/home/presseschau/archiv/aehnliche/archiv_article/ARTICLE137623-Erdo-an-s-conspiracy-theories-harm-Turkey

Blog: ECFR, 05.02.14: Turbulence in Turkey http://ecfr.eu/blog/entry/turbulence_in_turkey

The New York Times, 09.02.14: Turkey Struggles to Protect Its Lira http://www.nytimes.com/2014/02/10/business/international/turkey-struggles-to-protect-its-lira.html

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