Turkish Borrowing Costs Continue Climb Amid Interest Rate Cut

Source: Bloomberg

The reduction of interest rates in Turkey is starting to backfire, as indicated by the continued growth in borrowing costs. TUR is down 1.84% premarket.

• Bank loan rates have soared to as high as 35%, as reported by Union of Chambers and Commodity Exchanges President Rifat Hisarciklioglu.
• The latest rates compare with the average of around 21% prior to the start of the easing cycle, based on central bank data.
• Money managers believe the higher borrowing costs in the market are a natural outcome, as Turkey has given up on using its interest rate weapon.
• The median estimate of inflation is expected to hit an annual 27.3% in December, marking a six-percentage point increase.
• The 10-year government bond yields have climbed over seven percentage points to a record-high of 24.9%. It is ten percentage points over the benchmark repo.