PM Recep Tayyip Erdogan said on Wednesday that he was always against raising interest rates but he would remain patient with the central bank policy for some time. He believes inflation rise when interest rates rise, Erdogan explained. The government may announce an extraordinary economic package in the days or weeks ahead, Erdogan said without providing further details. The Central Bank's massive rate hike at an emergency meeting on Tuesday helped lift investor sentiment the next day and also helped restore the Bank's credibility but the euphoria proved short lived as investors are now refocusing on other major problems; political turmoil, a large current account deficit and FED tapering (as expected, the FED on Wednesday went ahead with cutting its monthly bond purchases by another USD 10bn ). Investors will try to assess the rate hike's potential damages to the rest of the economy, as higher rates may supress economic growth.
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