Turkey’s Central Bank took the decision on Thursday to raise the one-week benchmark interest rate by 750 points, from 17.5% to 25%: a record hike that exceeds even the 650-point increase adopted by the new governor of the Central Bank of the Turkish Republic (TCMB), Hafize Gaye Erkan, after she was appointed by Erdoğan in June. Since then, the TCMB has raised interest rates by 1,650 points.
The rate hike, the third in a row in the last month, has been welcomed by markets (with rises in the Turkish lira), which have also welcomed the appointment of Mehmet Şimşek as Turkey’s new economy minister, and surpasses economists’ expectations, who had forecast a rate hike of around 250 points up to 20%. The Turkish Central Bank said in a statement that “monetary policy tightening will continue for as long as needed until a significant improvement in the inflation outlook is achieved”. The Central Bank expects inflation to reach 58% this year.
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Pablo Gómez is a specialist in Turkey and has been editor-in-chief of Hispanatolia since 2011. He has been analysing current affairs and geopolitics in Turkey and the surrounding region since 2006.
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