Governor of Turkey’s central bank, Hafize Gaye Erkan, in Ankara, July 27, 2023 (Turkish Central Bank Press Office/AFP/Archives/Handout)
The Turkish central bank on Thursday raised its main key rate for the fourth consecutive month, now set at 30%, an increase of five points, the highest since 2003.
Faced with inflation in full rebound, at nearly 60% over one year, the central bank “decided to continue the process of monetary tightening in order to allow disinflation as quickly as possible”, it justified in a press release. .
Recognizing that “inflation was higher than expected in July and August”, due in particular to the surge in oil prices, the central bank says it expects further rate increases in the months to come, “until an improvement significant impact of the inflation outlook.
This latest increase bears the signature of the new Turkish economic team which took office after the re-election, at the end of May, of President Recep Tayyip Erdogan, who has raised rates by 21.5 points since June.
The head of state, who has long defended interest rate cuts against all odds – despite the double-digit inflation rates that his country has experienced continuously since the end of 2019 – seemed to act further increases in the coming months, saying at the beginning of September they were in favor of continuing a “restrictive monetary policy”.
Turkish Economy Minister Mehmet Simsek, whose appointment at the beginning of June was welcomed by investors, also recently assured that no rate cut was possible before the second half of 2024.
Inflation accelerated to 58.9% year-on-year in August after falling to 38.2% in June, returning to the peaks reached in October 2022, when it peaked at 85.5%.
© 2023 AFP
Did you like this article ? Share it with your friends using the buttons below.
