Turkey\u2019s central bank needs to raise interest rates to contain the country\u2019s financial crisis, veteran economist Stephen Roach told CNBC on Monday.<\/p>\r\n\r\n\r\n\r\n
Earlier in the day, Turkish\u00a0lira\u00a0dropped to a new all-time low of 7.24 against the U.S. dollar. It later\u00a0pared some of those losses\u00a0to trade around 6.99.<\/p>\r\n\r\n\r\n\r\n
\u201cThe markets clearly want much more decisive action,\u201d said Roach, former chairman of Morgan Stanley\u2019s operations in Asia.<\/p>\r\n\r\n\r\n\r\n
However, Turkish President Recep Tayyip Erdogan \u201cis not about to do that both in terms of policy as well as rhetoric,\u201d he said on \u201cPower Lunch.\u201d<\/p>\r\n\r\n\r\n\r\n
Roach, now a senior fellow at Yale University, believes what Turkey needs is \u201ca really large and strong monetary tightening.\u201d<\/p>\r\n\r\n\r\n\r\n
Last week, the economic crisis engulfing Turkey deepened after President\u00a0Donald Trump\u00a0said he was\u00a0doubling metal tariffs on the country. His remarks came after Erdogan asked citizens to convert their dollars and other foreign currencies and gold to lira.<\/p>\r\n\r\n\r\n\r\n
After Trump\u2019s comments, the lira\u00a0briefly plunged 20 percent\u00a0against the greenback on Friday, finishing the session lower by about 16 percent. On Monday, Turkey\u2019s central bank tried to ease fears by saying it will provide needed liquidity to the country\u2019s banks.<\/p>\r\n\r\n\r\n\r\n
Roach said what\u2019s most worrisome is not the cumulative decline in the currency but the speed of the fall.<\/p>\r\n\r\n\r\n\r\n
\u201cWhen you see an accelerating downfall like this met with largely incremental actions by the central bank, then you have to worry about where this is going with respect to Turkey,\u201d he said.<\/p>\r\n\r\n\r\n\r\n
Turkey\u2019s inflation rate reached 16 percent last month, well above the central bank\u2019s 5 percent target. While central banks generally hike rates to control inflation, Erdogan has opted to keep rates low in an effort to drive growth.<\/p>\r\n\r\n
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Turkey\u2019s central bank needs to raise interest rates to contain the country\u2019s financial crisis, veteran economist Stephen Roach told CNBC on Monday. Earlier in the day, Turkish\u00a0lira\u00a0dropped to a new … <\/p>\n","protected":false},"author":1,"featured_media":1440,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,708],"tags":[86,934,1096,664],"class_list":["post-54","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-economy","tag-business","tag-economy","tag-market","tag-turkey"],"yoast_head":"\n