January 29, 2014 / 3:31 PM / in 4 years

Turkish rate hike may protect capital inflows but growth at stake-Fitch

ISTANBUL, Jan 29 (Reuters) - Turkey’s sharp rate hike may reduce its vulnerability to short-term capital outflows and reinforce market confidence in the central bank’s independence but has also renewed growth concerns, Ratings agency Fitch said on Wednesday.

“Higher rates will reduce the affordability of debt repayments and could lower economic growth, both of which could weaken banks’€™ asset quality,” Fitch said in a statement.

The statement came after Turkey’s central bank jacked up all of its main interest rates to try to halt the lira’s sharp decline, ignoring political pressure to protect economic growth. (Reporting by Istanbul bureau)

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