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Turkish Central Bank, Lenders Meet Before Markets Open

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Asli Kandemir and Beril Akman

Sun, Mar 23, 2025, 8:21 AM 2 min read

(Bloomberg) -- Turkish central bank officials held a “technical meeting” with commercial lenders on Sunday to prepare for potential market volatility after a key opposition politician was formally arrested.

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The meeting discussed “the latest developments in markets,” according to a statement from the Turkish Banks Association.

Bloomberg reported earlier on Sunday that central bank officials would discuss possible coordination with banks and take stock of the recent selloff in Turkish markets, citing people with direct knowledge of the matter.

The meeting marks one of the first high-level gatherings between the nation’s lenders and the monetary authority since Istanbul’s popular mayor, Ekrem Imamoglu, was taken into custody earlier this week, rattling markets. The lira, Turkish stocks and debt subsequently posted some of the world’s biggest declines as investors weighed the risk of a potential reversal in Turkey’s economic policies.

Treasury and Finance Minister Mehmet Simsek met with banks on Friday, telling them that policymakers would use all the tools at their disposal to mitigate what he said was a “temporary” volatility in markets.

Imamoglu, who’s viewed as President Recep Tayyip Erdogan’s most prominent challenger, was jailed on Sunday on corruption charges. The court hearing the allegations against him decided against a separate, formal arrest on terror charges.

The central bank already stepped up its defense mechanism of the lira in the past week to ensure financial conditions remain tight. It lifted its overnight lending rate by 200 basis points to 46%, raising the average cost of funding for commercial lenders. It suspended lending at its lower, benchmark rate of 42.5% for an unspecified period.

The bank also said it will hold a liquidity bill auction with 91-day maturity, the first such action in nearly two decades, aimed at absorbing excess lira.

Following the moves, the lira overnight reference rate, a gauge of the cost of overnight funding, rose more than three percentage points to 45.7%.

(Updates lead to show meeting happened, banks’ association statement in second paragraph, confirming Bloomberg’s scoop.)