The country's central bank sent a directive to lenders, effective Friday, instructing them to put parts of their required lira reserves into blocked accounts. "Some banks have stopped lending. Some banks even recall their already granted loans. This is going to cause further liquidity squeeze," one Istanbul-based economist told CNBC.
Turkey's central bank is opting for a different monetary tightening method as it grapples with climbing inflation, after previously signaling that its rate-hiking cycle was over. The institution sent a directive to lenders, effective Friday, instructing them to put parts of their required lira reserves into blocked accounts. That's pushed loan rates up higher and cut the sizes of some banks' loan limits, with some lenders shrinking their commercial loan limits to 100,000 lira, or $3,100,"Some banks have stopped lending. Some banks even recall their already granted loans. This is going to cause further liquidity squeeze," Arda Tunca, an Istanbul-based economist at PolitikYol, told CNB