He Banco Central of Türkiye raised interest rates from 45 to 50% in an effort to control higher-than-expected inflation, which in February reached 67% year-on-year.
The issuing bank indicated in a statement that price increases in services, inflation expectations, geopolitical risks and the value of food maintain inflationary pressures.
“Tight monetary policy will be maintained until a significant and sustained decline in the underlying trend of monthly inflation is observed”the central bank stated, adding that it expects to see a gradual reduction in the second half of 2024.
This increase marks the first rate hike under the direction of the new Central Bank governor, Fatih Karahan.
President, Recep Tayyip Erdoganappointed Karahan in February, replacing Hafize Gaye Erkanwho resigned amid accusations of nepotism by local media, something she denied.
During Erkan’s tenure, the bank very quickly increased rates, from 8.5% in June 2023 to 45% in January 2024.
Turkey has been dealing with high inflation for years due, in part, to the unconventional policies of Erdogan, who prioritized a low price of money over controlling inflation.
However, Karahan has stated that his top priority is controlling inflation, pledging to raise rates further if inflation rises. EFE (I)
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