The Turkish central bank keeps its key interest rate at 9%. With this, the central bank is responding to the Turkish president’s desire to bring interest rates below 10 percent by the end of the year.
This while Turkey is struggling with sky-high inflation of over 84% year-on-year. Price hikes in the country are fueled by an unusual stance by President Recep Tayyip Erdogan.
With lower interest rates, the Turkish president wants to make investments more attractive and thus boost the economy. According to him, it will also become more attractive for Turkish consumers to borrow money.
But most economists believe that when inflation is high, interest rates should go up. Higher interest rates mean you spend less money. As a result, there is less demand for goods and services and prices go down.
Erdogan announced Thursday that Turkish residents earning the minimum wage will improve significantly next year. The Turkish government increases the minimum wage by 55%.
The minimum net monthly salary will therefore be 8,500 lire in 2023, which is approximately 427 euros. According to the Turkish labor minister, about a third of the working population earns the minimum wage.
The Turkish government wants to ease the pressure on the population, which has to deal with the increase in the cost of living, with the increase.
