The Central Bank of the Republic of Turkey (CBRT) announced the eagerly awaited interest rate decision following its first meeting of the year. The Central Bank raised the policy rate by 250 basis points to 45%, in line with expectations.
Interest Rate Hike Decision from the First Monetary Policy Committee Meeting of the Year
The Central Bank announced the interest rate decision after the first Monetary Policy Committee (MPC) meeting of the new year. The Central Bank increased the policy rate by 250 basis points to 45%, in line with expectations. Thus, the Central Bank has taken an upward step in interest rates in the last eight meetings.
As is known, the Central Bank took an upward step in interest rates in June 2023, ending the discount process after 27 months and increased the policy rate by 34 points to 42.5% throughout the year. Moreover, a tightening period in monetary policy began following the meeting in June.
Under the leadership of the new president Hafize Gaye Erkan, the Central Bank held its first MPC meeting in June and raised the policy rate by 6.5 points to 15%. In the July meeting, the policy rate was raised by 2.5 points to 17.50%. The Central Bank continued to raise interest rates in the August meeting, increasing the rate by 7.5 points to 25%.
In the September meeting, the policy interest rate was raised by 500 basis points from 25% to 30%. In October, the Central Bank continued to raise rates, increasing the rate by another 500 basis points to 35%. In the November meeting, the policy rate was raised by 500 basis points from 35% to 40%. Lastly, in the MPC meeting held last month, the policy rate was raised by 250 basis points to 42.50%.
Bitcoin Falls Against the Turkish Lira
In recent years, Bitcoin’s value gain against the US dollar has also led to its appreciation against other currencies, including the Turkish lira. Especially since the Turkish lira has been losing value against the US dollar for a long time, this appreciation process has occurred at an accelerated pace.
Bitcoin, which rose to 526,815 against the Turkish lira on April 12, 2021, entered a pullback after reaching its all-time high at that date. After falling to 254,051, Bitcoin’s price started to rise again, setting a new record at 852,499 against the Turkish lira on December 20, 2021.
Following its decline against the US dollar, Bitcoin began to lose value against the Turkish lira as well, dropping to 296,400 on November 21, 2022. After this drop, Bitcoin began to regain strength against the US dollar, and as the Turkish lira continued to lose value against the US dollar, the upward trend continued, and the largest cryptocurrency reached an all-time high of 1,476,497 lira on January 8, 2024. Since then, Bitcoin has been losing value against the Turkish lira, trading at 1,218,968 lira, down 1.11% in the last 24 hours on the Binance exchange at the time this article was prepared.
It remains a matter of curiosity how Bitcoin will perform against the Turkish lira following the Central Bank’s latest interest rate hike, but due to the rising interest rates, investors may be seen moving away from risky assets like Bitcoin.
